FAQ

While some brokers may label themselves as risk management consultants, there are key differences between the roles and typical work performed by an insurance broker acting as your risk management consultant as opposed to a risk management consultant that is not a broker or an agent selling insurance. Brokers differ in how they are paid, their motivations, their limited relationships with insurance companies, and have a different responsibility when reviewing your insurance policies, and more. For example, if the broker is getting commission from the insurance company, why would it behoove the broker to market your insurance program, spending weeks of work, to net you a substantial savings, which would lead to less commission dollars in their pocket?

Further, all brokers are limited in the selection of the insurance companies they can access by the relationships their agency has with certain insurers. Brokers earn commission by winning and placing your business. They earn nothing on the hard and necessary work that should come after a policy is bound, unless they charge you for their efforts. However, the commission paid to them is for servicing the insurance policy and your needs even after placement of the policy. They rarely review your policies after issuance by the insurance companies with the intent to match your risk to the proper insurance attached to that risk. They seldom seek to add hard to get endorsements which broaden coverage as they often don’t want to rock the boat with the insurer who is their provider of income or do not know or take the time to determine what policy enhancements and improvements can be expected of or offered by the insurance company.

Why, you ask, doesn’t your broker audit your policy and seek to add insurance coverages that can increase your coverage without any additional premium? Because he has little motivation, as all this extra work will not net him any additional commission dollars because the customary financial arrangement between the insurance company and the broker provides no incentive for the broker to seek policy changes which would benefit you, the insured, unless there is a premium attached or a fee charged for his efforts. Simply put, the broker is not incentivized to seek policy changes which would benefit you unless there is income to him attached to the transaction. This, of course, does not relieve the broker of their professional responsibility to do so.

ICA, as your risk management consultant, works as an extension of your company. In this regard, ICA is objective, in that the bias and personal interest is removed, because ICA, as your consultant, works for you and you only. ICA is not a broker or agent and remains totally independent of insurance companies, brokers or agents, acting solely as your outsourced risk manager and thereby enabling ICA to seek out the best insurers and service providers offering the best programs or Risk Management services at the best prices.

A company becomes an ICA Client typically when senior management requests ICA to perform an insurance audit of their current insurance policies. In other cases, they reach out to ICA because they are faced with a particular risk management need or dilemma, such as a cancellation of an important coverage, a skyrocketing premium, a huge uncovered loss, unhappiness with their current insurance provider, poor service from a broker, or a change in management that notices flaws in their risk management program. 

When engaged, ICA reviews the Client’s assets, tours their facilities, analyzes their existing insurance portfolio comparing it to their exposures, including various business agreements, and considers all alternative options. We will meet with management to discuss our findings, then will draft ICA Insurance or Risk Management Specifications, develop a strategic insurance marketing plan, manage the marketing process and seek proposals for coverage to obtain the desired insurance protection at the best available cost in the marketplace and or help qualify the third-party vendors that meet the requirements of ICA’s specifications or provide best practice solutions to improve the Client’s risk management program.

We find that many middle-market companies have as their broker, the golfing buddy or friend of a principal, and therefore these prospective Clients of ICA have never questioned what they are paying or whether their coverage truly protects their exposures – often simply because these companies have never had any losses to test the adequacy of their coverage. One frightening problem with this complacency is that a GL policy from a few years ago is not a GL policy today. Over time the coverage has gotten more limited and the language drafted more favorably to the insurance company. In effect, if 90% of any potential claims against your company would have been covered in 1990, today that figure may be only 50%. Has your broker described to you what effect these policy limitations have made on your coverages? Probably not. And most other types of insurance policies have also been cut back and the language tightened especially during a hard marketplace. In the coverage provided by many other types of insurance policies, the insurance companies have also reduced the breadth or scope of the insurance coverage, thereby allowing the insurance companies to develop and sell new products.

It is ICA’s job to identify the risks that face your company, inform you as to what coverage you have or don’t have and how to fill any gaps. It is also our job to take each one of your policies, each year, point out the changes and mistakes and go back to the broker and insurance company and demand they get corrected. Brokers tend to stop working when the coverage is bound except for administrative responses to client driven questions. On the other hand, ICA works to improve your coverage constantly, during marketing and especially after a policy is issued, following up to ensure that the insurance company actually adds the quoted coverages to the policy as promised. ICA has found that at least 90% of all policies issued to insureds arrive with errors not agreed to at binding. ICA scrutinizes the policies once they are issued and then doggedly pursues the brokers and insurance companies to amend the coverage to fulfill its contractual promises.

Another serious problem with allowing the same broker to continue indefinitely without introducing competition is that the broker may have no incentive to re-market your insurance program to assure the terms and pricing continue to be competitive if the broker goes unchallenged. As an insurance buyer, you may be in a position whereby you complacently allow a slight increase in premium each year as a given, yet you may be unaware that the pricing for similar policies may have gotten very competitive. So long as you are willing to accept a renewal on an “as is”, basis why should a broker seek competitive quotes, especially if it is going to cost the agency much time and expense? 

The insurance marketplace is in a state of constant change, and any insurance buyer should always know whether his program is competitive in the current marketplace. The buyer should consider marketing his insurance program at least every three years, to assure it remains competitive, not just with their friendly broker, but with other competing brokers as well. ICA’s objective position as a pure risk management consultant, not tied to the sale of insurance in any way, allows us to recommend the best coverage available at the time. We will help you achieve the results you desire, even if your goal is to continue doing business with your existing broker relationships.