What Does an Insurance Broker Do?

Many people primarily think of insurance brokers as salespeople. But this ignores the value of the expertise that brokers bring to their clients.

An expert broker not only secures the right insurance coverage for their clients, but they should also bring opportunities to better manage the risks threatening profitability and the continued viability of the business.

Put simply, a good broker should be working as a business partner and advisor at all times.

Holistic Approach

Instead of focusing on the premium for a specific policy, a skilled broker looks at the company in a broader, more strategic context. Your broker should examine your overall needs, examining:

• Your key business objectives,
• Unrecognized issues driving benefit costs higher than they need to be,
• Your future plans for an acquisition or hope to be acquired, and
• How your company can attain the headcount needed to support an upcoming expansion in a tight labor market

Taking a holistic approach to your insurance is the hallmark of a good broker working on your behalf.

Alternative Strategies

When a broker has a solid understanding of a company’s business objectives, they can then respond with innovative strategies far more impactful and long-lasting than simply choosing a carrier.

For example, a company may think it simply needs a larger insurance policy, but your broker may recognize other, more economical ways to reduce the inherent risk (such as loss control programs), better addressing the company’s needs and saving it money. After all, insurance coverage is only one of many ways to manage risk. Through their expertise, brokers may present other ideas clients may not have considered.

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Proactive Approach

Most companies don’t have the time or desire to become insurance experts, and not all companies need a full-time risk manager on their payroll, so they count on their brokers to communicate timely knowledge and advice.

Take the COVID-19 pandemic, for example. During the initial response to the pandemic, the federal government issued a slew of rules and regulations related to healthcare and health insurance, from how COBRA should be administered to changes in the timeframe of HIPAA special enrollment periods to implementing subsidies.

Companies struggling to stay open and afloat didn’t have the time to stay ahead of all these developments, so brokers took on the task of gathering and analyzing the information, then disseminating it in easy-to-understand language so employers could comply with new requirements.

Benefits and the Labor Market

Another example of how a broker partner should recognize timely challenges and bring creative solutions to the table involves employee benefits programs in the current labor market. It hasn’t taken workers long to recognize the strong demand for their services, so companies have had to deal with rising wages, high turnover and longer hiring cycles. Generous benefits programs have become a must-have for organizations needing to attract and retain the best talent. The simple solution is to budget more money for compensation and benefits, but that’s not necessarily the best response financially.

The right broker approaches employee benefits from a strategic perspective instead of simply seeking the lowest premium cost. Whether that’s solving a talent retention issue, exploring alternative structures to control costs while providing a higher level of care, or seeing up a more efficient benefits administration system, the broker’s expertise supports the company’s objectives well beyond recommending policies.

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Answers in Data

Risk management programs typically generate megabytes of data. Skilled brokers constantly analyze that data to identify patterns and root causes. A broker may notice an increase in claims that warns of an increased risk of heart-related issues, such as more prescriptions for blood-pressure medication. Further investigation reveals most of these claims are coming from workers in sedentary roles, so the broker may recommend a wellness program that includes a walking challenge. Improving the employees’ health averts larger and costlier claims down the road.

Bigger Isn’t Better

There’s a common misconception that larger, publicly owned brokers offer both pricing advantages and a greater depth of resources than smaller, privately owned brokers. But the truth is quite different.

Independent firms provide competitive pricing and access to comparable tools and expertise, with two differences. First, a privately owned firm is more likely to view a company as a valuable client and partner than a huge national firm, and their high-touch service will reflect that. Second, an independent firm’s experts are generally more accessible than their counterparts at big firms, making it more likely the company will be able to work directly with them. It's time to ask yourself if your broker is really working for you. If they aren’t being proactive, bringing your company holistic solutions with your future in mind, it may be time to consider a different broker.

The above information does not constitute advice. Always contact your employee benefits broker or trusted advisor for insurance-related questions.