Navigating Commercial Insurance: What Your Business Needs to Know about Insurance Consultants vs. Brokers
You might think your company doesn’t need a commercial insurance consultant because you already work with insurance brokers. Brokers and consultants, though, offer two very different services. Here’s a quick breakdown of what each role entails, the key differences between those roles, and when it’s time for your company to seek a consultant.
What Is a Commercial Insurance Consultant?
A commercial insurance consultant is not affiliated with any specific insurance broker, insurance company, or lobbyist. Independent commercial insurance consultants are an objective third party.
They come into your business and assess holistically what your most favorable insurance program and strategy should be. Especially in today’s commercial insurance landscape, this often entails navigating costly syndications, or groups of policies from multiple insurance companies.
A commercial insurance consultant’s job is to ensure you:
- Don’t have any gaps in coverage
- Get the most favorable insurance policy terms
- Enjoy the most cost-effective insurance premiums for your asset portfolio
- Act proactively in regard to your commercial insurance needs, minimizing unpleasant financial surprises
What Is a Commercial Insurance Broker?
A commercial insurance broker is affiliated with a specific insurance company or, in some cases, multiple insurance companies. Brokers act as intermediaries between the client and those insurance providers. Brokers are authorized to gather quotes on your behalf and to sell you insurance.
While their role in the insurance procurement process is important, they do work on a commission structure. This means they are financially incentivized to push your company toward a specific insurance provider. This differs from a third-party, objective consultant who would come in and look at the entire insurance picture before making any insurance recommendation.
3 Main Differences between Commercial Insurance Consultants and Brokers
These two roles—consultants and brokers—are often confused, but there are three key differences every business owner or COO needs to know.
- Charging Models
- An insurance broker is associated with one or more specific insurance companies and are compensated through commissions. When you purchase insurance from their associated insurance companies, those brokers get a percentage of that sale.
- A commercial insurance consultant, on the other hand, charges a fee for consulting services rendered, regardless of what commercial insurance program you ultimately select.
- Service Offerings
- A broker will gather quotes, compare insurance policies, and sell you insurance. A consultant is there to offer their experience, expertise, and insurance-related consultation services.
- With a consultant, you’re paying for the ability to partner with someone who has deep insurance industry knowledge, forward-thinking strategy, and your best interest at heart. Because they aren’t beholden to any specific insurance company, you know you’re the client, and they will work to get you an insurance plan that maximizes coverage and minimizes risk at the most cost-effective price point.
- Role in Insurance Acquisition
- While a broker has the authority to actually sell insurance, a consultant makes recommendations for you to follow or not.
- In this way, both brokers and consultants play an important role in insurance acquisition. A great insurance consultant will have established, trusted relationships with insurance brokers. This allows the consultant to make their objective assessment of a company’s commercial insurance needs. Then, once the business owner or COO greenlights an insurance strategy moving forward, the consultant can work with brokers to actually execute that plan with the chosen insurance companies.
Does Our Company Need a Commercial Insurance Consultant?
If you’re a business owner or a chief operating officer (COO), you might think your commercial insurance needs are covered because you have a corporate team to take care of it.
But here’s the problem.
When you’re starting a new venture or offering a new product or service, you’ll often have that team of corporate brokers and lawyers at your disposal—and yet nobody will fully understand the risk exposure for your business.
Even when it comes time to sign on the dotted line of a contract, nobody can confidently answer those critical risk-related questions.
This is where a commercial insurance consultant is invaluable. A consultant’s job is to oversee everything around that commercial insurance policy.
- Premium costs
- Policy terms
- Coverage (or gaps) for your company
- Long-term planning and thinking around your insurance needs
Offering an objective, high-level view, a consultant helps you look at and manage every aspect of your risk exposure. This protects your asset portfolio—today and in the future. It helps you avoid extensive (and unexpected) financial surprises. It gives you a roadmap to proactively plan for future insurance needs, including insight around your capital expenditure strategy.
Overall, commercial insurance consultants are there to use their expertise, industry knowledge, and objectivity to help you sleep better at night.
Are you ready to better understand your commercial insurance? At MB Davis Group, we’re a team of qualified, experienced commercial insurance consultants, and we’re always happy to answer your questions!
Book your free commercial insurance consultation with us today.
