In the world of business insurance, lining up multiple brokers to submit coverage applications to multiple carriers was long thought to be a smart buying strategy. It never actually was, but things are definitely different today.
Insurance underwriters are being swamped with more submissions than ever. In fact, as rates keep rising, they’re pretty much drowning in a sea of poorly conceived, hastily written submissions that they’ve come to dismiss as “practice quotes.”
It turns out that insurance underwriters will only put their best foot forward with the agent who has the best chance of writing the business. Everyone else is viewed as a waste of time.
In other words, choosing the right insurance broker from the get-go is more important than ever.
It’s hard to blame the underwriters. The deluge of submissions muddies the water for them. Imagine having to sift through three or four different submissions from three or four brokers, each telling a different version of your story. This approach not only clouds matters, but also hampers the underwriter's ability to accurately assess risk.
In response, underwriters are turning up their noses at subpar submissions and narrowing their focus, making it even more crucial to get things right the first time.
What underwriters and insurers are now looking for are submissions from one broker who really understands the nuances of their client's business. The “practice” quote is for amateurs.
Underwriters, of course, have a lot on the line. They have reputations to protect and can even face termination if they write bad risks. Insurance companies have never liked writing policies for poor risks and are more selective today than ever.
Interestingly, despite higher insurance rates and changes in underwriting focus, two-thirds of insurance buyers don't shop for new insurance annually. As the nature of the business changes, these buyers risk missing out on the best options available in the market.
The bottom line? The insurance industry is in a state of flux. Increased submission counts have put huge pressure on underwriters without yielding better outcomes for buyers. In the new paradigm, quality trumps quantity, and expertise is prized over sheer volume.
The best way to win the best coverage at the best price is with submissions based on a clear understanding of the risks faced by your business, preferably by a broker whose underwriting relationships are based on trust and mutual regard.
The Mahoney Group, based in Mesa, Ariz., is one of the largest independent insurance and employee benefits brokerages in the U.S. An employee-owned organization, we’ve been providing our clients with the confidence to face whatever lies ahead for more than 100 years. For more information, contact us online or call 877-440-3304.
This article is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.