With property/casualty insurance being such a major cost factor for construction companies, it’s important to understand how the marketplace works. How do carriers view you as a potential client? What is the role of your broker? What should you look for when evaluating who will represent you? Here is a behind-the-scenes look.
The realities of representation
The number of times you go out to the marketplace and the number of brokers shopping your business will ultimately have an impact on your premium. Think of the job hopper who moves from company to company every year or two. When the same resume keeps showing up on employers’ desks, they are viewed less favorably than other candidates. The same holds true for insurance carriers.
Here’s their thought process: “Why put the work into underwriting a piece of business and provide best pricing when we are only going to have this company for a year?” Like everyone in business, carriers value meaningful, long-term relationships.
In whose best interest?
Watch out for a sales technique called ‘blocking the marketplace.’ Some brokers will present your business to 10 or 20 different carriers, effectively blocking out other brokers. By stymying their outside competition, they are looking out for their own bottom line, not yours. Insurance companies want to work on opportunities where they will get treated fairly by the broker submitting your business.
Also, think about how a broker is spending their time. If they gather basic information and quickly put together an application, it will leave the carrier with unanswered questions. That leads to lots of back and forth. Is that the most productive and efficient approach?
The investment that a broker makes in understanding your business upfront is a good indicator of the time they will invest in you as a client.
Key factors to know
The quality of the broker’s application on your behalf matters. A thorough application depends on whether a broker has asked the right questions about your operations. Do they understand your EMR and how it was calculated? Have they done a site inspection themselves or do they rely on the carrier? Can they discuss your safety record including the improvements you’re making in detail with the carrier?
Another key factor is leverage. Does your broker represent a few carriers or many? At MRG, we have long-standing relationships with nearly every national and regional carrier. However, when it comes to presenting you in the insurance marketplace, we are selective, matching you with a handful of carriers that are right for your circumstance.
In this way, carriers know when MRG presents a company, the carrier has a genuine opportunity to write the business. Our submissions go to the top of the stack, and the carriers put their maximum effort, and best pricing, into them.
Industry knowledge and expertise
A broker well-versed in the nuance and nature of your business will serve your interests at a higher level than a broker covering many industries at a basic level. Construction insurance is extremely complex, involving contract language, bid specs, subcontractor coverage and more. There are many different types of insurances to consider—from commercial property and workers’ compensation to pollution, inland marine, and cybersecurity.
Make sure your broker thoroughly understands the construction business. That knowledge makes it much easier to act proactively on your behalf.
Salesman or advisor?
Most insurance brokers know the basics, like how to get quotes and issue certificates of insurance. Some will say they have safety experts, but the truth is most rely on carriers’ safety personnel to evaluate risk and conduct trainings. At MRG, we have a Risk Control department who are out on job sites continuously, identifying hazards, training workers, and putting programs into place to protect your team and your business.
We also have claims experts on our staff working with adjusters to ensure they are working toward resolution and a staff attorney to guide clients through any legal issues.
Here are a few final thoughts. When you’re thinking about insurance brokers to work with, ask yourself these four questions: “Does this broker know as much about construction safety as I do? Will they educate me about every type of coverage my construction business might need, or do they just know the basics? Do they have a staff who live and breathe construction every day? Can I trust them as a valuable member of my team, and a partner in my long-term success?