Selecting the Right Insurance Broker

Much like insurance policies themselves, the brokers who sell them can be very diverse. Selecting the right policy can be overwhelming to most hoteliers, especially when you add in the various quirks of brokers. In order to provide the best protection for your business, it is helpful to know what kind of broker to look for. Here are eight types of brokers you may encounter:

The New Guy: New brokers start selling insurance across the country every day. Most are handed a list of businesses and a phone as their business plan. The fail rate for a commercial insurance broker is over 85 percent. Warning: New brokers have little understanding of coverage or how to measure risk. They have sales goals and that’s typically all they care about. Let them learn at someone else’s hotel. You want someone with at least 3-4 years of experience.

The Low Price Leader: This broker lures customers with the promise of the “lowest price.” They advertise the cost of a policy and draw in buyers based on lower premiums. They will offer savings without knowing your business, current premium, or loss history. This can often be “The New Guy” calling, but not always. Warning: These discounted policies may not provide the coverage needed. When filing a claim, you may find yourself being denied coverage for which you thought you paid.

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The Networker: This broker meets clients through networking with organizations, friends, and family, as well as through community involvement. They build relationships and use them to close deals and keep business. Warning: They may not be qualified to handle your specific needs. Lack of knowledge and experience can be hidden behind a great relationship or friendly introduction.

The Coverage Expert: The coverage expert knows a lot about insurance in general, as well as the specific coverage they’re trying to sell. Most expert brokers have some form of designation, such as CIC and/or CPCU, associated with their name. Warning: The coverage expert may not offer additional services or understand how the coverage applies to your industry.

The Industry-Focused: The opposite of a Generalist, who gets business anywhere, the industry-focused broker concentrates on clients in a particular niche. They understand the unique needs of the trade they cater to, including how their industry meets and communicates. The focused agent could be a good choice if they cater to your industry and understand coverage that fits in with your business culture. Warning: Do not select a broker who specializes in an industry other than your own.

The Service Provider: This broker relies heavily on his staff and the services they provide to reel in and keep clients. They may provide extra services or even coordinate extra services through the carrier. Depending on needs, this could save you time and money in the long term. Warning: Extra services can be great, but don’t lose focus. The policy is what you’re paying for if there is a claim and should remain the priority.

The Giant: The giant often attracts and maintains business simply because they’re a huge company and people recognize their name. If your business needs a big name for credibility, this type of broker could be for you. Warning: The giant may not be any better, or even as good, as others. Depending on the size of your premium, you may not get the attention and service you want. Buyers can fall victim to the “they are big, so they must be good” attitude.

The Professional: Professional brokers demonstrate most of these traits and have stood the test of time. Professionals are experts in the industry they work in, understand coverage and how it affects the trade, and have taken the time for continued education and attaining best-suited designations. Their operation is large enough to provide all the services you need, yet small enough to see you as more than a number. While they understand the importance of the bottom line, they don’t lead with it to the point that you are in danger at claim time.

You are too busy and your business is too important to risk on the wrong broker. Some important questions to help qualify a broker choice should include:

• How long have they been selling commercial insurance?
• How many hotel clients does the office represent?
• How many hotel clients do they represent personally?
• Get references and call them. Your priorities could be different than the reference.
• Do they have any professional industry designations?
• Will they be involved after renewal or will you be handed off to another team?

David DeMoss is president and founder of Wakeup Call, an online hospitality risk management provider. Prior to founding Wakeup Call, DeMoss spent more than 10 years as an insurance broker to hotels across the U.S.

NOTE: For clarification, a broker generally works with many carriers and represents the insured. An agent has their primary relationship with one carrier and represents that carrier. A salesperson for either a broker or agent is called a producer. For our purposes, we use ‘broker’ to mean any person or entity presenting insurance solutions for your property.