If you own a business, you should have a commercial insurance policy, and may have other forms of insurance including professional liability, directors and officers coverage, etc. Before purchasing your insurance policy, you must first select an insurance agent that you would like to work with. On the surface, insurance can seem like a commodity and many insurance agents treat it as though it is by selling policies simply on the basis of price. The reality is that insurance is more than a product – it is a critical tool in any business’s risk management strategy – and crafting a policy that provides adequate protection for your business requires more than a cursory review of your company and the business it is in.
Not all insurance agents are the same. The right insurance agent will approach their relationship with you as a partnership and not simply a sale. How to choose the right insurance agent for your business? Shop around and know what to look for when selecting your partner!
The call is yours
There are literally thousands of insurance agents and insurance companies that would love to have your business. The important thing for you as a purchaser is to know what you need. Are you simply looking to purchase the lowest price policy, or are you interested in reducing your overall business risk and ensuring that you are protected when risk becomes reality? If it’s the latter, a great approach is to seek advice from the lawyers and accountants who helped you open your business. Often, they can recommend the right agent for your needs.
Do some homework
Before meeting with an agent, it is important to have a basic understanding of the types of insurance products you may require. This is another situation where your corporate attorney or accountant may be able to help. With so many forms of insurance on the market, it can be difficult to understand which may be appropriate for your situation.
- Workers’ compensation is a sophisticated product with subtle ways of determining premium.
- Life insurance may be the best vehicle for a buy-sell insurance agreement.
- Businesses with products have needs different than those that provide services.
- Sole proprietorships need different security than partnerships or corporations.
- Fire, flood, and others risks mean different things in different locations and different industries.
Before an agent can recommend what types of policies you should purchase, they must first identify and measure the risks to your business. Only then can they determine the best way to manage them. For this reason, you need the agent who has broad and deep experience in all lines of liability. Experienced and reputable professionals pursue continuing education and performance recognition. So, look for the initials after their name: CLCS – Commercial Lines Coverage Specialist, CLU – Chartered Life Underwriter, CRM – Certified Risk Manager, CPCU – Chartered Property Casualty Underwriter, or REBC – Registered Employee Benefits Consultant. There are yet more, but each of these represents years of coursework and testing.
What to value?
The ability to identify and manage risk is the key to a strong partnership with an agent, a holistic approach that reduces costs before they occur. Insurance rates are often based on the number and dollar value of claims, so it stands to reason that, to the extent that you can reduce the incidence and cost of claims, the better off you and your business will be. Look for the agent whose approach involves examining the broader risk management issues facing your business, and whose recommendations include more than simply purchasing insurance.
Accidents will happen, but communication and readiness can improve the odds. When employees and staff are well-informed about risks, their potential consequences, and workable prevention, safety becomes a team event. The agent who can provide material resources in the form of manuals, signage, and training is a personal value to your business. These are the partners you want to sign with.
Choose the agent for whom service is the unique value proposition. Value the commitment and mutual self-interest because it is to your advantage as well as the agent’s to develop and sustain the relationship.
Gary Grissom is a partner and Senior Risk Advisor at Texas Associates Insurors. Gary’s expertise extends to the construction, manufacturing and oil & gas industries where he partners with clients to develop effective cost-reducing risk management strategies.