March 2008: Feature Story

The 10 Question Test
Avoiding Cheap Immitations and Finding the Right Insurance Broker for You
By Michael Landucci and George Luther

Cheaper alternatives are always a temptation, but often these low-cost, low-value substitutes leave you with a feeling of emptiness. The same can be true when shopping for a new insurance broker, but the empty feeling radiates from your pockets.

Today’s best brokers do far more than place policies or bonds, they provide strategic business solutions — much like an attorney or a CPA — that can help protect your business and build your bottom line.

How do you know which broker is right for your business? Picking the right broker for you doesn’t happen by accident. It involves carefully considering your risk management needs and then finding the right broker to meet them. This can be particularly challenging to utility contractors.

“In a risky business like construction, choosing the right broker is critical to your success,” explains Henry Lombardi, president and COO of Allied North America, a firm with more than 30 years of helping construction industry clients. “You really need someone who understands the subtleties of your operating environment, the risks you encounter every day — and who can help you create sound strategies to help you manage them effectively.”

There are some basic questions you should be asking the brokers you interview. Here’s a list of 10 you should consider:

• Who will be handling your insurance on a day-to-day basis? When it comes to utility contracting, the more experience, the better. If it doesn’t look like your day-to-day person knows your business, look elsewhere.
• Does this broker just process Workers’ Compensation and Casualty claims or manage them? Claims management is vital and can save you tens of thousands of dollars per year.
• How strong is his or her surety standing? What is his or her level of experience? Do they have relationships with the best surety markets? While the surety market appears to be on an upswing, securing a bond is far from a sure thing; you want a broker with a solid relationship with key bond underwriters.
• Does the brokerage have expert safety support? Accidents happen, but a proactive approach to worker and environmental safety can help formulate, implement and monitor a program to help you manage them.
• Who are the three top insurance markets they recommend for your business and why? You want a broker who possesses an in-depth understanding of the construction insurance market and can put that knowledge to work for your business.
• What kind of relationships does the broker have with other professionals within the construction industry? Your broker should be a key part of your team of business consultants — attorneys, CPAs and other industry affiliates. If the broker doesn’t know the leading professionals in your area (and vice versa), chances are, he or she isn’t one of them.
• Will there be a defined service plan with clear objectives and timelines to improve upon your existing program? Like any good business plan, know your objective before hand. If your new broker is just proposing more of the same and doesn’t have definite goals for your relationship, then why bother?
• What contractor references are available from the broker? The best, most accurate advertisement is always word-of-mouth. Your broker interviewee should be ready, willing and more than happy to share a list of contractor clients with you. But don’t just ask for that list, use it.
• How quickly and accurately are certificates processed? Who will be handling your requests? It’s all about service, service, service.
• What specific services does the broker provide that will benefit your company? This goes back to prioritizing your insurance needs before you sit down with a broker. Make sure the broker puts an emphasis on services you need (i.e., loss control, risk management, contract review, OCIP review, etc.). Stay focused on the services that you need and choose the broker that excels in those areas. Full-service brokerages, such as Allied North America, provide a diverse array of insurance and surety services, as well as risk management and safety management services.