What Risk Managers Expect from Their Insurance Brokers: RIMS

A broker who does not fully understand a client’s business or lacks direct links with insurers may not only fall short in advising on coverage, but can cause headaches on all sides of the insurance relationship, according to an attorney representing policyholders.

Selena Linde, a partner with the Seattle law firm of Perkins Coie LLP, told attendees at the Risk Insurance Management Society 2015 conference that choosing an insurance broker carefully can be crucial to effectively managing risk in nearly any company.

“Talk to your broker and see what services they can offer you,” she advised risk managers.

“Brokers have a lot of tools in their arsenal that are really quite helpful, but if your relationship has gone stale they may not be giving you that information,” Linde said. “You have to ask the questions.”

Joining Linde in the session titled “What has your broker done for you lately?” was Craig Hoffman, risk manager for Wakefearn Food Corp., a Keasby, N.J.-based company that is the largest retailer-owned cooperative in the United States.

Hoffman, who in recent years has overhauled his company’s risk management program, said a key to effectively managing the wide-ranging risks employers of all sizes routinely face is making sure the right people are on hand to guide the company through policy decisions, claims filing and every other insurance-related function.

“We do things the old-fashioned way,” he said of his company’s approach to designing its insurance coverage. “It’s all about relationships, with brokers and underwriters.”

Insurance professionals “are an extension” of the risk management department, he said. “You have to make sure you have the team that can understand your business and your needs as a company.”

Both panelists noted that risk managers are looking for ways to customize their insurance coverage. That has led many businesses that previously relied on a single broker to scout for multiple brokers.

Issuing RFPs

The panelists urged risk managers to consider issuing a request for proposals (RFP) to identify well-qualified brokers. The benefits of RFPs go beyond simply selecting the best insurance professional, they said.

“You’ll actually learn a lot about what’s going on in the industry through the RFP process,” Linde said.

Offering samples of generic RFP documents, the panelists explained that risk managers should carefully customize the RFP to a business and allow time for brokers to respond with a thoughtful proposal.

A business should provide the brokers with as much useful information as possible — including key financial data and past claims information — to give them an opportunity to evaluate the company’s needs and provide a meaningful response.

But in providing information to a broker, Linde emphasized that the relationship is not privileged.

“You do have to be careful in discussing (sensitive) information with your brokers,” she said, reminding that brokers also work closely with insurers and could share information that might adversely affect the client in the event of a coverage dispute.

She said any broker who is provided with potentially sensitive company information should be required to sign a confidentiality or nondisclosure agreement first.

Good Brokers

Linde offered several other tips that can help distinguish a good broker.

Brokers who want to be responsive to a client’s insurance needs will go the distance to show their interest and learn the client’s industry, she said. Typically, they will make multiple visits to the office or work site throughout the year and will work closely with insurers to shape appropriate coverage.

A good broker should help to educate the company on insurance products, propose ways to minimize risk and stay abreast of changes in the client’s industry, Linde said.

Hoffman added that the broker can be an invaluable team member when it comes to getting claims paid.

Noting that members of in-house risk management teams often oversee claims filing and payment, Hoffman said he likes to tap the broker for help in this area.

Topics Agencies Risk Management