Conservation United recognizes that the insurance industry faces a crisis of negative perception, and that insurance brokers are often seen as pawns in game designed to maximize premium and commission. Carriers are sometimes seen as predatory, monolithic titans of a corrupt industry expert at mining policies with exemptions and justifying denial of claims to maximize corporate profit. Having developed and managed nonprofit organization for the majority of his career, Chris Baker can certainly appreciate this opaque and uncomfortable view of brokers and the carriers whose policies they represent. The reality is that most brokers work hard to survive in a highly competitive industry, serving their clients with honesty and respect. Insurance carriers encourage brokers to understand their clients’ specialized needs and offer a vast array of “endorsements” to cover almost any foreseeable risk, but are wholly dependent on brokers to accurately assess and present these needs. Good intentions often break down because the insurance industry has not yet caught up with a world of increasing specialization. As long as insurance brokers continue to represent a portfolio of companies across a multitude of unrelated industries, gaps in coverage will be common place and negative perceptions will prevail.
- Last Minute Renewals:Some brokers know that nonprofit managers are supremely busy people, pulled in multiple directions with multi-faceted and ever evolving responsibilities. Such overtaxed managers are unlikely to keep insurance renewal dates in the front of their minds. As the annual renewal on each policy approaches, brokers may be hesitant to remind their clients of the date for fear that advance notice will stimulate competitive bids from other brokers. If your broker routinely calls you several days or 1-2 weeks before policy expiration and asks that you sign Acord applications for renewal, you should suspect that he/she is hoping that you won’t have time to seek competitive bids. Conservation United promises to keep you well informed of your renewal dates and to be entirely transparent in our process of quoting each policy’s renewal. We expect to remain your insurance and risk management partner for the long term, but we trust that effort, integrity, and transparency complementing our specialized experience will be sufficient to retain your business without surprising our clients with last minute renewals.
- Blocking the Marke”:It is widely assumed that all brokers have equal access to all carriers. This is entirely false. A carrier will only issue a quote to one broker for each organization, on a first come, first serve basis. The first broker to submit a request for quote for a particular organization has sole right to that carrier’s quote. The most effective means of preventing a current client from considering another broker is to “block the market” by submitting a blizzard of requests for dozens of carriers to quote. Incumbent (current) brokers have immediate access to all the data such as loss runs and current policy copies that are needed to submit to a carrier for a quote. They therefore have the ability to submit to dozens of carriers, even if they have no intention of even considering most of those quotes. The very process of submitting any request for quote blocks any other broker from quoting. The incumbent broker may justify this tactic under the guise of being thorough, but unless each request for quote is itself thorough and informed, and unless they present each quote to the client, you can rest assured that blocking the market with a swarm of quotes is not in your organization’s best interests. Conservation United promises only to request quotes from carriers with which we have strong relationships and from whom we honestly feel we will access competitive pricing and comprehensive coverage. We will be thorough in marketing your policies to multiple carriers, but promise to carefully consider and present to you the strengths and weaknesses of each quote. We will not block the market by thrusting forth applications with dozens of carriers just to prevent other brokers from accessing their best carrier options.
- Withholding Loss Runs:In order for any broker to request a quote, they must submit complete loss runs for all policies over a 3 to 5 year period. However, only the incumbent broker or the client has access to loss runs. As a prospective broker hoping to compete for your business, we have no access to loss runs unless you grant us authority to procure them. Brokers are fundamentally required to provide you with loss runs upon request, and you are completely at liberty to share them with any broker, but some brokers wait as long as possible to send them. Others send you incomplete or illegible copies, knowing that a competing broker cannot use them to request carrier quotes unless they are full and legible. If your broker appears reluctant to share loss runs with you, they are not working in your best interests. Brokers should not only share, but also thorough explain and discuss your loss runs at regular intervals. A thorough broker should be able to calculate and explain, for example, how each workers compensation claim impacts your future premium. Losses should be discussed both in terms of improving safety and risk management procedures, and in order to provide insight into the financial implications of each loss. Conservation United promises to make loss runs available and to discuss and analyze them with you at regular intervals. You should expect no less of a broker that serves as a genuine partner in risk management.
- Withholding Policies and Exemptions:Your insurance policies are only as good as their exemptions. An insurance policy can be superficially inexpensive, but laden with exemptions that conspire to eliminate important layers of coverage. Brokers sometimes access inexpensive policies, take a bow for saving your nonprofit money, but leave you catastrophically exposed. The decision on which coverage to purchase is always up to our clients. Conservation United promises to explain every exemption and its possible impact without the pressure of upselling. Less scrupulous brokers sometimes withhold the actual policy in the hopes that you will not notice certain exemptions. More commonly, brokers do not offer to send clients the final policies because clients can use them to inform competing brokers. Conservation United promises to provide you every policy, and to explain every exemption and its potential impact.
- Under “Rating” Your Organization and Premium:Conservation United promises to use our decades of real world nonprofit management and field experience to accurately present workers comp class codes. Conservation United promises not to encourage you to use an inappropriate class codes just to win your business with artificially low premium. We will not create the mirage of saving your organization money in order to fend off competition while leaving your staff, your board of directors, your organization, and ultimately your very cause in a peril of potentially expensive and ill-timed audits or denied claims. General Liability and Directors and Officers policies are also “rated” to determine premium based on several factors, including your most recent and anticipated program revenue. Incumbent brokers sometimes use data that is many years old to hold premium artificially low, secure in the knowledge that a competing broker will initially quote based on real, higher revenue and will have no chance of presenting a competitive bid. This tactic again creates the illusion of pricing efficiency, while exposing your organization to the potential of denied claims based on willful misrepresentation.
- Maximizing Premium to Maximize Commissions:Some brokers walk a tight rope. They simultaneously employ every possible tactic to keep your business each year, while striving to charge the maximum premium that won’t lead you to seek another broker. The higher your organization’s premium, the higher the commission for the broker. The insurance industry is built on this fundamentally contradictory premise. Theoretically, brokers are supposed to represent the best financial interests of their clients, but success in lowering premium directly sacrifices brokers’ commission. If you pay $50,000 in premium and a carrier offers $40,000, even a mildly unscrupulous broker is dis-incentivized to even present the savings. A common fallacy is that brokers are required to present every offer. In reality, brokers have absolute discretion over whether to present a carrier’s quote. If they feel that an account is secure, that a client is not “shopping” their policies to competing brokers, they may not reveal the less expensive option for fear of whittling away their commission. Conservation United promises to always seek and present the best possible options, even if doing so costs us commission. Having spent my career as a Founder and President of a nonprofit, I am committed to upholding your mission in every way possible, even if Conservation United’s commission are temporarily reduced by virtue of our success in saving your organization on premium. Conservation United is also ambitious, and also wants to maximize premium, but we want to do it by supporting our nonprofit clients, allowing them to focus on pursuing their respective missions, and helping them to grow into forces for community causes. Successful nonprofit that provide invaluable service to address community needs tend to grow. A growing portfolio of successful organizations leads to commission growth in a positive way.