Having the right broker can be the most important decision in your firm’s insurance programs. The wrong broker can recommend the wrong coverage designs, wrong companies, and cause you to overpay by tens of thousands of dollars. Their expertise can assist you with valuable advice so that you have the right coverage and coach you in the process to obtain the lowest premiums. Just like a Real Estate lawyer isn’t the right lawyer for a private placement offering, your broker has to specialize.
Side note: While not the topic in this post, having multiple brokers for the different types of insurance is inefficient and leads to many mistakes.
These are five questions that you can ask your current broker to quickly determine if they indeed have the experience and benchmarking knowledge to effectively advise you. We’ve also given some perspective on the possible answers.
1) All Brokers: How many law firms like ours (size and specialty) do you represent? Seven to ten similar firms is a good start.
2) Professional Liability Broker: What are some of their issues on the professional liability application and what have you done to lower their financial exposure with the structure of their policy? They should have many examples.
3) Professional Liability Broker: How many insurance companies do you access for obtaining professional liability insurance? If your broker uses one or very few companies, you will get skewed market knowledge and are exposed to getting sup-par terms.
4) Health Insurance Broker: What benefit designs are common for equity partners, contract partners, and associates at firms like ours? Peer benchmarking is essential for best results.
5) Benefits Broker: How is your understanding of law firm partnership rules impacting your recommendations for the structure of our health insurance, disability insurance and other employee benefits?
6) Property and Casualty Broker: What are the key terms that my firm’s Employment Practices Liability Insurance policy must have? Your policy has to reflect the new structure of law firms (equity, non-equity, of counsels, etc).
Changing brokers can be a difficult decision due to emotional or business relationships. However, staying with the wrong broker can be costly and damaging to the financial health of your firm.