The cost of commercial insurance can really add up for many business owners, in fact, for some businesses, the cost of insurance can easily be the difference between profitability or not. For some businesses the costs of insurance piles up as you have to satisfy contractual requirements, and for others they must meet legal requirements. Either way, with every additional policy you purchase, the more crucial it becomes to get the best rate. When it comes to getting the best rate, it’s important that you select just a couple of agents to work with, here’s why:
For starters, the premise behind insurance is to transfer risk from your company to the insurance company. Understanding your company’s risk takes an intelligent agent to know the state of the market but also point out some risks that you may not be aware of. As you start your discussions with an agent you’ll get a feel for their breadth of knowledge and when you find someone who is knowledgeable, you have to trust that they will do what’s best for you and your company. The recommendation is typically two agents, any more than that and it makes it hard for you to manage everything.
Second, working with many agents can cause blocking of markets. What this means is that the first agent to approach an insurance company is the first one in. Any other agent that approaches that same insurance company for the same line of insurance will be blocked. If you work with more than two agents, they will begin trampling over each other to access markets and it is completely unnecessary.
As an example, let’s say an agent for commercial trucking insurance approaches AIG for a quote and shortly after a second agent also approaches AIG. The second agent will be blocked from getting terms. The more agents are involved the more this happens. Instead, work with a couple of agents that have access to many markets, or have relationships with specialists that can access specialty markets. This way, your main markets are covered but the one agent will also have access to markets that the other does not. Also vice versa.
Last, good agencies have a solid network of tools, data, benchmarking and other resources to ensure that you’re not only adequately covered from a limit standpoint, but that your policy wording is also buttoned up and is as broad as possible. These resources can help highlight your company’s vulnerabilities and pinpoint where you need to focus your efforts to get the most coverage. Typically you’re going to see these resources offered from the larger brokerage firms, but some smaller agencies are also extremely tech and data savvy and can provide something similar. You’ll also find that the larger brokerage firms are able to “throw their weight” if necessary to get you terms that you deserve.
In the years past, the mentality was that you had a better chance of getting the best insurance terms if you had as many agents working for you as possible, but the fact is that the majority of agents won’t have the means or resources to pull it off. Your best bet is to carefully vet out a couple that you feel confident in and allow them to show their value. Once it’s time to make a decision, you’ll know exactly which agent to choose from.