When speaking with small to mid-size business owners ($1,000,000 to $35,000,000 in annual revenues), I am intrigued by how many hats they have to wear. The hat I am interested in the most however, is the insurance or risk management hat. When asked how often the insurance hat is placed upon the proverbial business head, I am amazed to hear about 10%. That translates, in conservative terms, to equal 200 hours a year! When asked further, it becomes crystal clear that there is no way they are thinking about risk and insurance to the tune of 200 hours per year. That is where a true professional insurance agent or broker comes in.
With so many demands on business owners today from payroll to receivables, deliveries to billing, there is a true need to have a professional work on and monitor your insurance and risk management demands. Here are a few items that should be entrusted to your agent or broker:
- Claims management
- Certificates of insurance
- Changing exposures
- Trends in premium pricing
- Safety programs
- Fleet management and regulatory updates
- Policy enhancements
- Risk reduction techniques
Having a true business partner goes beyond the transaction of purchasing insurance. With the amount of commission built into the premium to compensate the agent or broker, the business owner needs to effectively use the available resources of their insurance professional. On average, 10%-15% is built into the premium to compensate the agent or broker (some commissions may be higher or lower depending upon the line of coverage). Think about this…on a $100,000 premium program, $10,000 to $15,000 is paid to the agent or broker. After realizing the transactional costs, how much additional service may be provided with the remaining revenue earned by the agent or broker. Remember, ask for help with insurance and risk management issues. That (advice and counsel) is what they are there to provide.
