The Best Kept Market Secrets for Commercial Insurance Brokers
TLTR: This blog explores the roles and responsibilities of commercial insurance brokers, highlights five must-have traits for brokers to possess, and highlights the pros and cons of the profession.
The insurance process is complex and filled with sophisticated terminologies that could confuse even the most adept insurance professionals. With new policy changes and state laws updated almost regularly, it isn’t uncommon to find business owners feeling confused and instead opting for inaction.
When business owners decide on purchasing insurance, they either contact an insurance agent or an insurance broker for assistance. As experts in the field, it is their responsibility to guide their clients and navigate them out of their predicament and towards insurance policies best suited for them. So, let’s understand the roles of commercial insurance brokers and what traits you need to possess to ensure that your business stays afloat and your clients remain satisfied.
In this blog
What Do Commercial Insurance Brokers Do?
A commercial insurance broker is an insurance professional who acts as an intermediary between their clients and insurance providers. As an insurance broker, it is your responsibility to help your clients find clarity for their insurance woes and steer them away from unnecessary spending.
While insurance agents and commercial insurance brokers both sell insurance, the difference lies on who they represent. Where insurance agents represent insurance companies during the insurance process, commercial insurance brokers represent their clients.
This means that they aren’t tied to selling insurance products from just one or a couple of insurance companies and can choose from a pool of multiple carriers. And since their profession involves comparing premiums from a wide variety of insurance providers, they are more likely to find ideal insurance rates for their clients.
Since they are not tied to any insurance companies, commercial insurance brokers are also more likely to be unbiased and work in the best interest of their clients.
Apart from selling, soliciting, and negotiating insurance on your client’s behalf, some of your primary responsibilities as an insurance broker will include:
- Researching policies
- Developing effective marketing strategies
- Providing clients with advice on risk management
- Preparing reports
- Managing business development and promotional activities
- Maintaining a proper database
- Keeping up with insurance-related regulatory and legislative updates
- Cultivating new clients
Five Must-Have Traits of a Commercial Insurance Broker
When business owners decide to buy insurance, they put in a lot of thought and consideration behind it. So, when they approach you, be it through a phone call, an email, or an office visit, you have to be ready to meet their needs and expectations. It is essential to understand that the quality of your service will directly impact their lives moving forward.
Here are some of the most vital traits that a commercial insurance broker needs to possess:
Display Product Knowledge and Experience
Businesses owners buy insurance because they feel that they could experience a financial risk in the future. Some risks can cause irreparable damage that there’s no turning back from. So, as a commercial insurance broker, you have to be aware of all the inner workings of the insurance industry and possess all the necessary skill set to tackle any hurdles that might come your client’s way.
A good commercial insurance broker assists business owners in assessing potential and persistent risks that their company is facing. This way, they are able to deduct and recommend the appropriate insurance policy that can best address the identified risks.
A commercial insurance broker may also refer their clients to a lawyer or accountant depending on the circumstance.
Have Good People Skills
The relationship between an insurance broker and their client stands on a foundation of mutual respect and constant communication. An insurance broker who cannot get their clients to open up and retrieve the necessary information might end up advocating the wrong policies. This can lead to a catastrophic impact for both parties moving forward.
Your clients will initially be wary of how you conduct yourself. So, make sure that you come off as a professional social, and knowledgeable broker. One way that you can do this is by empathizing with your customers. An article on Harvard Business Review found that businesses could greatly reduce their customer attrition by 4% by establishing an emotional connection with their clients. So, make a proactive attempt to listen to what they’re saying. You can also take notes of specific points that you feel need to be addressed.
A research paper of ResearchGate found that factors ranging from trustworthiness, expertise to physical appearance had a significant impact on customer’s willingness to make a purchase.
It is only once you get a good understanding of your customer’s needs can you identify the insurance type and policy that best fits their scenario. While advising your clients, make sure that you’re also explaining each policy’s strengths and weaknesses and their alternatives.
Show Drive and Determination
Your client will be closely assessing your performance as a broker although the insurance process. They can as easily decide on replacing you with another agent anytime they want. So, if you’re going to establish yourself as a professional commercial insurance broker, you will need to show that you have a strong work ethic and are driven to ensure that your clients receive the best service.
But being determined isn’t enough! Not all clients are built the same, and a proper broker should also know how to customize their approach to guide your clients through the insurance process.
For example, business owners applying for insurance for the first time will appreciate and value such qualities in a broker.
Provide Exemplary Customer Service
One of the most efficient ways to ensure that your client stays with you is by offering exemplary customer service. Make sure that you’re well prepared to answer all questions that your clients could ask. Put in the time for research beforehand and make sure that you’ve got the full picture of the situation.
Good customer service also entails keeping things transparent and not delaying any positive or negative news involving your clients.
Keep in mind that your clients are more likely to establish long-lasting relationships with a broker who is trustworthy, reliable, and efficient at their job.
Always Be Available
Successful insurance brokers are ones who can be reached at any time of the day or night. Think about the last time you called someone during an emergency. Now, remember how frustrated and helpless you felt when your phone call went unanswered. When a customer contacts you, it’s usually always because they have something essential to discuss.
Make sure that you’re providing timely responses to any queries and phone calls that come your way. When your clients can get a hold of you when they need to, they are more likely to stay happy and content.
Also, make it a point to be present throughout the insurance claims process. Your clients will appreciate even the most minute of extra effort you put in. It can also help you get clients through referrals.
How Do Commercial Insurance Brokers Make Money?
Insurance brokers earn money through commissions and fees that are based on the insurance policies they sell. Most commissions range anywhere between 2% to 8% of the premiums. But the rates can vary depending on the insurance type, state regulations, and insurance companies.
The insurance copany pays a lump sum percentage of the first-year premium to the insurance broker for the sale of their insurance product. Furthermore, they also earn a smaller but ongoing annual residual income during each renewal process throughout the policy’s life.
Pros and Cons of Being a Commercial Insurance Broker
If you’re looking to start a career in insurance as a broker, there are a few things that you need to consider. As with all professions, working as a commercial insurance broker has it’s set of pros and cons.
As a commercial insurance broker, you will have a lot of freedom and flexibility to work in a manner you’re comfortable with. You can choose to work from your home, your office or even a local café. You can also set your own office hours.
However, you need to remember that your sales success is built upon the foundations of your own hard work and effort. So, while you can customize your work schedule, you will still need to commit to your responsibilities towards your clients. This includes prospecting, quoting, and servicing your clients all throughout the insurance process.
You can mitigate some of the workload by joining an insurance agency.
While your earnings may vary by the type of insurance you sell and the insurance company, insurance brokers can earn a good income. According to ZipRecruiter, top insurance brokers can earn up to $153,500 annually or $74 an hour, and the bottom 25% can earn $50,000 annually or $24 an hour.
Helping Clients Protect Their Future
As a broker, you will build a career by helping your clients protect their health and finances. Very few things feel better than experiencing the joy in people as you help them find the best homeowners insurance or car insurance.
Your Earnings May Experience Fluctuations
Finding success as an insurance broker requires dedication and patience. While you could have all the motivation and drive to succeed, if you’re impatient, you could quickly feel discouraged and even want to leave the industry.
You will need to put in the time to identify and nurture your prospects into clients. And since insurance sales are mostly commission-based, your income may fluctuate from high to low every month.
So it is vital to maintain a steady flow of clients if you’re to maintain a consistent income.
Continuing Education is Mandatory
The insurance industry is highly dynamic, and the specifics of the policies, along with the national and state regulations that shape them are modified and changed on a regular basis. So insurance brokers will need to enroll in a mandatory Continuing Education (CE) program.
For example, the states of California and Nevada require insurance brokers who operate within the state lines to complete additional training to keep their insurance licenses. California requires 24 hours of Continuing Education which includes three hours of ethics training. Nevada requires their insurance brokers to enroll for 30 hours of CE credits, including three hours of ethics training, every three years.
Being a Broker Will Require Training and Background Checks
Most states will require toy to earn an insurance license in order to start selling insurance. In order to get the license, you will need to complete any state-mandated pre-licensing training. You will also need to pass a licensing exam.
For example, in California, a minimum of 20 hours of study is required along with 12 hours of training on codes and ethics. Similarly, in Nevada, you will need to complete 20 hours of training for Life insurance and a further 20 hours of training on health insurance.
Your state will also conduct a background check where your criminal record is assessed. This check can include your fingerprints and any other necessary documents that might be deemed necessary. The concerned authorities will heavily scrutinize any blemish on your record.
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Frequently Asked Questions (FAQs)
What Are the Largest Commercial Insurance Brokerages of 2021?
Betters Insurance conducted a study on ten of the top insurance brokerages in the U.S. for 2021. Their list is as follows:
- MARSH AND McLENNAN COS. INC. ($14.20 billion)
- AON PLC. ($10 billion)
- WILLIS TOWERS WATSON PLC. ($9 billion)
- ARTHUR J. GALLAGHER & CO. ($6.16 billion)
- BROWN & BROWN INC. ($2.38 billion)
- Betters Insurance (Revenue unspecified)
- TRUIST INSURANCE HOLDINGS INC. ($2.27 billion)
- HUB INTERNATIONAL LTD. ($1.8 billion)
- USI INSURANCE SERVICES LLC ($1.81 billion)
- ACRISURE LLC. ($1.71 billion)
Can Insurance Brokers Bind Coverage?
No! Since insurance brokers represent their clients and not the insurance company, they cannot bind the coverage themselves, and must turn the process over to an insurance agent to complete.
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