By Kevin DiPetrillo, Partner, PointeNorth Insurance Group
I recently received a call that felt very familiar. A contractor was referred to me after experiencing a significant error made by his current insurance agent. Frustrated and exploring his options, he wanted a fresh perspective.
We discussed the problem and I suggested some potential solutions. We built a good rapport and he said, “You clearly know your stuff. I’d like you to shop my insurance. I have a couple other agents working on it. I’ll send you what I sent them.”
I knew the opportunity was likely over before it began. Why? Many insurance buyers don’t realize that in the commercial insurance world, most carriers will only provide a quote to one agent — the first one to submit an application. Once that application hits the carrier’s desk, the market is “blocked.” No other agent can submit the account or even discuss it with the underwriter.
Because this practice is standard across the industry, agents are incentivized to move quickly. Often, the first agent to speak with a prospect will submit partially completed applications to every carrier they represent, simply to secure their position and block competitors. Incumbent agents frequently do the same. By the time a second or third agent is invited into the process, many of the most competitive carriers are unavailable — sometimes all of them.
What’s more, those first agents typically don’t intend to work seriously with every carrier they block. They know that only a few are truly competitive for a particular industry or risk profile, and they will focus their efforts on the carriers with whom they have the strongest relationships. The result? A client may have dozens of carriers blocked, while only five or six ever take a meaningful look at the account.
So, how can an insurance buyer get multiple professional opinions on coverage structure while also ensuring real, competitive market results? The answer is shopping for an agent, rather than a policy and using carrier assignment.
If you want to engage more than one agent, start by interviewing them, select the ones you’re interested in working with, then assign a balanced group of carriers with whom they should work. The first step is being intentional about agent selection. If your process is simply responding to whoever calls you that year, chances are you’re leaving value on the table. Instead, seek out agents who specialize in your industry — often through trade associations. Ask for referrals from fellow business owners or trusted advisors. Look for professionals who demonstrate thought leadership and industry knowledge on platforms such as LinkedIn.
With some prospective agents identified, step two is to interview them and select someone to work with. Ask yourself an important question: Are you hiring a trusted advisor, or just selecting a vendor? If you want an advisor for your business, interview them the way you would a key hire. Ask about their experience and their firm’s resources. Ask what they would change about your current insurance program. Explore what services they provide beyond simply quoting coverage.
Now that you’ve narrowed the field of potential advisors, it’s time to assign them carriers. Ask each agent which carriers they would like to approach and have them rank their top three. If there’s overlap, distribute those carriers thoughtfully — much like a draft — so each agent has a legitimate opportunity to compete. This ensures the strongest carriers in the market are truly competing for your business, rather than being sidelined by strategic blocking. The result is often lower premiums and a higher level of advisory service from the agent. This assignment is done through giving each agent an Agent of Record Letter listing only those carriers the agent is authorized to negotiate with on your behalf. The agent will provide the letter template.
There are two final considerations for an effective process. First, allow enough time. Small businesses may be able to shop effectively in under 30 days, but larger organizations require more runway. If you have more than 10 employees, agents should ideally have at least 60 days with underwriters, which means starting the process 90 days before renewal.
Second, avoid shopping every year. Long-term carrier relationships matter — especially in years with challenging claims. Carrier underwriters also keep a record of accounts they’ve worked on in the past. If they see that your business has been submitted to them every year and they’ve never had much traction, they’ll focus on a different account they believe they have a better chance to write, and your account will get a throw-away quote. In most cases, shopping every three years strikes a better balance.
Good luck with your next broker selection. With the right process, it can deliver a very different — and far better — result. Until next time, here’s wishing you a safe, productive, and successful spring.
Kevin DiPetrillo is a Partner at PointeNorth Insurance Group. With a degree in Risk Management from The University of Georgia, he has been helping businesses and High Net Worth households with their insurance needs for 25 years. Visit pointenorthins.com to see how the company can serve your needs.
