• March 20, 2024

Debunking insurance myths part 1: involving more brokers when renewing insurance gets you a better deal

Let’s address a common misconception: Some people think that if you involve more brokers when renewing insurance, you'll get a better deal in terms of cost, coverage, and services.

Debunking Insurance Myths Image 475 X 360

However, this approach can lead to complications:

Confused communication: Additional brokers may present conflicting information to the insurers, causing them to lose faith in the material facts. This situation can lead to a lack of confidence, causing some insurers to decline to quote.
Lack of value addition: If the additional brokers fail to contribute unique expertise or a different perspective to the proceedings, their involvement may not add significant value.
Less bargaining power: Surprisingly, having too many brokers in the mix can weaken your ability to negotiate, potentially leading insurers not to take you seriously.
Reduced accountability: With multiple brokers involved, it can be challenging to assign clear responsibilities, resulting in a lack of accountability in the service provided.

Being selective and employing a defined strategy when approaching the market is key to supporting your business and should be at the forefront of conversations with your broker at renewal.

Methodologies

There are multiple methodologies that can be used. Here are some examples:

Conceptual review
In a conceptual review, your broker’s first step is understanding your requirements and how they can employ their skills and service to enhance the insurance programme and risk management features.

Your broker would then approach the market after a professional partnership has been struck. Essentially, it's about marketing your broker's expertise before marketing the client's needs.
A silent costed review
A silent costed review ensures no other brokers are alerted to any other broker participation. It involves a market review without revealing the client's identity to underwriters.

This approach allows a specialist broker to benchmark, identify coverage gaps and conduct a comprehensive service review without external pressures. It can also ensure an unbiased evaluation.
Nominated market review
In a nominated market review, selected brokers nominate specific insurance markets to approach for costed options and service proposals, with the holding broker selecting the holding insurer as the first choice.

The limited selection (typically up to five markets) ensures a focused marketing exercise and the creation of a competitive environment among insurers.

Conclusion

While it's tempting to leave reviewing your insurance details for another year, you must keep them up to date and accurate. Regular conversations with your insurance broker can ensure prompt, straightforward updates and renewals and save you valuable time maintaining this important information.