The insurance market is a complex and often irrational one. Navigating it needs the skills of professional insurance brokers. Believe us, not all insurance brokers are the same. Anthony Jones Insurance Brokers have no masters – we are not part of a huge empire and are not dictated to as to where we should or should not be placing business.
We are not afraid of our client’s sense checking our advice and are open to feedback and reviews as to how we as a company are doing and that of individual members of staff.
However, we do see the occasional client involving multiple brokers to seek alternative quotations to those proposed by us.
More frequently, we are approached by potential clients only to then find that insurers have already been approached by other brokers. This is not a great idea for insurance buyers – the pond we are all fishing in has limited insurance capacity and it doesn’t react well to being bombarded by several brokers for the same client.
Why Do We Say This?
- Multiple brokers often offer different information to insurers. Insurers immediate response is to revert to distrust and negativity. Coordinating and communicating with multiple brokers can lead to miscommunication. Typically, this is because different brokers are talking to different people in a business.
- It depends what insurance you are looking for. Brokers have different types of policies or have different areas of expertise. Spreading your efforts too thin might mean you don’t get the best advice or the most suitable policy.
- Brokers often have access to similar markets and insurers. Using multiple brokers might result in repeated efforts, and you might not get better options than if you used a single, well-chosen broker.
- Building a strong relationship with a single broker can lead to better service, as they understand your needs better and can provide more personalised advice.
Why Do Insurers React Badly to Business From Multiple Brokers?
- There is an implication that the potential client is showing lack of trust and loyalty to the role of the broker or insurer. This might be true, but insurers do not like being seen as anonymous capacity providers, so they don’t put forward competitive terms
- Brokers often “block” markets by submitting applications to insurers. If multiple brokers are involved, they might block each other from accessing certain insurers, reducing the overall options available to the client. It would not be unheard of for brokers to provide unrealistic pricing demands to solicit a no quote from insurers or simply to ask a market to decline a proposal to block another broker obtaining a quote.
- Desk Topping – the insurance industry is well versed with competing brokers telling a potential client that they can place their business at a price they have not yet obtained for the market. The quote is fictitious and is provided in the hope that the broker can get an insurer to agree. This is bad practice and is frowned upon as it undermines the entire role of a professional insurance broker presenting a risk and obtaining contract certain quotations.
Moving Insurers (and Brokers) is a Big Decision
- Pinch hitting – insurers might be tempted, due to their own internal pressures or pressures from a broker, to price very aggressively to win the business. Whilst this might be advantageous in the short-term, time and time again, we see big upward swings at renewal that outweigh the saving at inception. The adage if it looks too good to be true ….
- Unintended consequences – new insurers usually request a site survey for property and liability exposures and will quote subject to survey. Ask a broker if this is the case. Clients can find quotes withdrawn which causes problems and/or additional costs to comply with comply with requirements applied by the insurers such as security upgrades or Health and Safety measures.
What Should You Be Aware of When Choosing a Broker?
Insurance broking can be cutthroat. There are many situations where a broker looking to win new business will try to undermine an existing broker. Clients should be aware of some tactics we see regularly.
- Letters of Authority – brokers ask a potential client to sign a permission form to obtain quotations on their behalf. You do not need to do this.
- Letters of Authority part two – buyers can (and do) unwittingly appoint a new broker without understanding that they have done so. This often results in confusion for brokers and insurers often involving rescinding the original instructions.
- Economic buyer – another issue we see are Letters of Authority signed by less senior people within a business only for that to be superseded by a higher authority unaware.
Be aware that involving too many brokers is often counterproductive. Be careful in what you sign and who signs Letters of Authority. Understand how insurance markets work. Have confidence that choosing Anthony Jones as your insurance broker is a good decision. Get in touch and find out if we can help you and how.
