Did you know that many states require businesses to provide coverage such as workers’ compensation or even health insurance? The compliance requirements can vary by state — and it’s one of the reasons why 81% of employers rely on guidance from their insurance broker to get things right when providing employee benefits.
Finding a broker that can give you access to the best options for your business is crucial — but brokers do much more than pick policies and negotiate competitive rates. Many are trusted advisors that assist with policy-related questions and concerns throughout the year. In fact, benefits play a big part in attracting and keeping top talent, so the broker you choose should have both the interests of your staff and your company’s bottom line in mind.
Let’s dive in to find out what to consider, questions to ask, and some tips to ensure you find a broker that fits your company’s long-term goals.
What are the broker’s qualifications?
When starting your search for a broker, a little homework goes a long way, and the first step is to ask the broker about their credentials. This is because professional licenses are required by law in many states for brokers to sell you the insurance they present to you — and most are obligated to act in good faith by putting your needs first when offering any recommendations.
You can check the validity of a broker’s license(s) on a number of state insurance department websites, and some of them also offer details on previous disciplinary actions, if any have been taken. It’s always a good idea to verify licenses and run background checks, and the good news is that you can usually do both with just a few clicks on your computer or mobile device.
Additionally, professional certifications are a good sign that you’re vetting an individual who takes their work seriously. Most brokers with high ratings have a few of these under their belt, such as a Certified Insurance Counselor (CIC) or Certified Insurance Service Representative (CISC) title.
It also helps to find a broker that sees the bigger picture. “You want someone who has an understanding of all the risks you as a business owner should know about,” says Paul Foery, VP of Insurance at OnPay with over 30 years of experience consulting small and medium-sized businesses on benefits and workers’ compensation. “Yes, you want someone who has a license and understands the law, but you also want somebody who knows what you’re buying and how it pertains to the business in the long run.”
How long have they been in the insurance agency?
There are additional things to look out for during your search besides learning about a broker’s credentials. Although it may sound like a no-brainer, your broker should have at least a basic understanding of your industry and the variables associated with it (note that most are not professional risk managers, though).
A broker who has previous experience setting up plans in your industry is more likely to recognize the best options, has worked with similar employers, and has a Rolodex of carrier contacts they can reach out to for plan options and rates.
Ideally a broker will have experience not only in your industry, but also with companies that are of a similar size. That’s because the number of employees plays an important role in finding the right policy for you. And if you can find someone that’s worked with companies with a similar budget, even better!
What other qualities should you look for when choosing a broker?
During a broker search, having a basic understanding of industry terminology goes a long way too. Again, we caught up with OnPay’s Vice President of Insurance, Paul Foery, who shares a common misunderstanding he often hears when speaking to clients. “Something that tends to get mixed up a lot is the difference between an insurance agent and a broker,” he says. “It is important to understand that agents represent the insurance company and brokers work for you, the client.”
In terms of support, it’s also important to understand how the broker’s process works. Do they have specific office hours they make available for questions? Are they on sales calls for large chunks of the day and prefer to handle responses by email or online chat? When your broker is not free to chat, find out what resources are going to be available or if there’s an alternative contact for policy questions.
Also, note that during open enrollment it’s very likely your employees will have a bunch of questions that pertain to their personal health situations. Having someone knowledgeable to answer them will help them make better-informed decisions.
In the world of insurance policies, once a plan is selected there are updates that will be a regular part of administering the plan. These include (but are not limited to) address changes, family status changes, and new hires. All of these can affect a policy, so your broker should be proactive, make the appropriate changes when necessary, and review your plan with you on a regular basis to ensure you’re getting the coverage you need at the best possible price.
And because insurance is complex, you should never be embarrassed to ask questions — and it pays to find out how your potential brokers approach this point. More from Paul: “I would want a broker that can explain the complicated world of insurance at a level that I and my employees can understand — and they should want you to feel comfortable with all the information. There are no bad questions.”
What are questions to ask your potential broker?
After you’ve done your research and found someone you are interested in working with, consider asking them these questions before you commit.
What types of insurance do you sell?
As mentioned earlier, each broker has to obtain specific licenses to sell you certain types of insurance. So, if your business needs a special type of coverage, confirm with the broker that they will be able to provide you with it.
What credentials do you have?
Many brokers have credentials specific to the insurance industry, such as Chartered Property and Casualty Underwriter (CPCU) or Certified Insurance Counselor (CIC). If they have credentials you’re unfamiliar with, ask them to explain them in more detail — and do some research on your own afterwards, too.
What insurers do you represent?
The financial stability of the insurance provider should also be taken into account when selecting a plan. So, once you find out the insurance companies your broker can work with, you should research their financial standing using reputable agencies like Fitch Ratings, A.M. Best, Standard and Poor’s, Moody’s, and the Kroll Bond Rating Agency.
What additional services can you provide?
New products and technology enter the marketplace on a regular basis, so having a broker who’s proactive in this area can make it a lot easier to offer great coverage for your team — without extra administrative hassle. For example, additional tools such as electronic benefit enrollment or employee benefit booklets can streamline the enrollment process and let your team do more for themselves.
Can you provide references?
It’s always a good idea to ask your potential broker for a handful of references that are open to a conversation, similar to how you would speak to references when hiring a new employee. They should be able to provide contact information for previous satisfied clients they have worked with, and it’s worth your time to make that phone call and ask for feedback about your potential broker.
Brokers do more than break down benefits
If you’ve done your research, had your questions answered, and are satisfied with their expertise, you’ve probably found a broker that’ll be a great match for your business. No matter if you’re researching pay-as-you-go workers’ compensation or trying to set up an HSA for your small business, you’ll be glad you took the time for due diligence. It can take time to develop a strong working relationship and find a broker who can meet your needs.
But once you find the right person, they can help simplify what can be a complicated process — and help you take the best care of your team and your business as you grow.