Insurance Brokers, Agencies, Agents, Carriers And Your Business
Insurance brokers, agencies and agents are terms which are somewhat confusing and sometimes used interchangeably though there are subtle differences. Both agents and brokers must pass the a similar licensing exam in order solicit or sell insurance, but their point of allegiance can differ. The broker represents the client and the agent can represents the insurance company. But this difference is often more vague than this definition conveys – both will provide businesses with excellent results as long as the business selects an agency or broker with the requisite expertise required. Agents are licensed and often have credentials such as CIC (Certified Insurance Counselor), but an agent working for a broker can have this designation too. An agency often connotes a group of agents working within the same organization, often with additional staffing and resources.
The size of an agency or broker can vary dramatically, from under $1 Million in annual sales (commissions) to billions of dollars in sales for agencies like Marsh, Aon or Willis. The use of the title “insurance broker” may convey that the entity is larger in size and scope than an agency, offering a wide variety of businesses services including risk management, financing, investments and consulting services. Whereas an agency might focus on narrower offerings, though they can also provide a full spectrum of services. Once again, the line is blurred as the differences between these labels can be as vague as differences between political rivals.
Regardless of the broker versus agency designation, and as a broad generalization, businesses should seek an insurance agency or broker who is licensed in their state with expertise within their industry. If you own a California Restaurant, you should seek a local agency in California which is knowledgeable about restaurant coverage. If you run an agribusiness near San Francisco, the same advice holds true, though you may consider trading off location from a proximity perspective for expertise in your specific business niche, in this case agribusiness. It is important, when searching for business insurance, to select an insurance broker or agency that has access to a broad range of carriers.
Major insurance companies are often well known names like The Hartford, Chubb, Allied, Zurich, St. Paul Travelers, Safeco, Everest National and Liberty Mutual. Most carriers sell their insurance through agencies and brokers. Think of carriers, agencies and brokers in the same way you might think of a PC computer company and their network of retailers. For example, you can purchase an HP, Dell, Compaq, or Toshiba from many retailers like Best Buy, Target, Wal-Mart or Sears. One key difference, however, is that insurance brokers and agencies must be licensed to sell insurance in their respective state(s) of operation. This provides us with the basis for a quick definition of insurance business terms. Carriers provide the actual insurance policies, whereas brokers and agencies sell the policies to a business. Brokers and agencies also provide guidance and expertise, and shop for the best combination of premium and coverages as they seek quotes from insurance carriers on behalf of their business clients.
In our analogy above, it’s important to note that retailers may or may not carry all types of PCs. By the same token a broker may or may not have access to all the carriers a business might need, and may or may not offer all the coverages a business wants. For example, if a business has a relatively traditional type of coverage need (and a good track record), it is likely they will be able to utilize A-rated carriers, and receive competitive quotes from multiple carriers. If a broker or agent has access to all the primary (best) carriers for applicable types of insurance; there is no need to shop through multiple brokers or agents – the rate for a business will be the same, regardless of which agent gets the quote.
This is due to the fact that insurance carriers will only quote an applicant once. Once a broker submits an application on a company’s behalf to a carrier, all subsequent applications from other brokers are “blocked.”; Where the competition lies is between carriers, and with the specific risks applicable to that businesses, it’s important that companies do their homework when it comes to the selection of a broker, and the resulting policies and premiums for their business.
Finding a reputable agent is important to building a successful, long-term, business and insurance relationship. There are many important aspects of business insurance that vary by region. As such, it’s crucial to ensure that an agent knows the area, the specific business and its regulations. In the Midwest, there is snow, ice, white outs and blizzards, while in California there are earthquakes, mudslides and fire related hazards to consider. Thus California agribusiness insurance will require different guidance and expertise than snow, wind and ice related business insurance in North Dakota.
Agents should be able to respond quickly and knowledgeably to questions via email or phone (the same or next business day). It’s a good idea to ask them how long they’ve been an insurance professional and if they hold industry certifications such as CIC (Commercial Insurance Consultant). Requesting a list of current references of business owners will also ensure the quality of an agent. For example, in California, a business can check the California Department of Insurance (Licensing Bureau) to determine if any complaints have been lodged by policyholders. And regardless of venue a traditional checkup with the Better Business Bureau can always help a business insurance review process.