How to Select an Insurance Broker or Agent

1) The Difference Between a Broker and an Agent.

A Broker or Brokerage Firm is legally required to represent your interests and those of your Employees. They are your advocate in the Insurance Marketplace (Brokers are often referred to as Independent Agents).

An Agent is an Insurance Professional who works for one specific Insurance Company and acts as an intermediary between the Insurance Company and the Insured. As a broad statement of law, the agent's liability to the customer is
administrative (Agents are often referred to as Captives).

BenefitPlace suggests using a Broker rather than an Agent. The Broker should be able to better match your Organization's and Employee's needs with the Programs, Products and Services available in the broader marketplace.

2) What to Look For in Selecting a Broker.

The Broker you choose should have experience working with Organizations of similar size and in the same Industry as yours. Critical elements to your choice should be:
          a) Licensing - Insurance Brokers are required to be be licensed in each state -
            the licenses should be in good standing.
       b) Experience - How long has the Broker worked within the Insurance
            Industry and with groups of your size in your Industry?
       c) References - The Broker should be able to provide you the names of
            Organizations, Contacts, and Phone Numbers.
       d) Complaints - Check with the State Insurance Departments for complaints
            filed against the Person &/or Brokerage Firm (Insurance Departments can be
            located through www.naic.org) or the Better Business Bureau (www.bbb.com).
       e) Ease in Communications - A good Broker can interpret your
            questions - what you need to know - and explain the confusing insurance terms
            to make them understandable.
       f) Responsiveness - Pay attention to how long it takes the Broker to respond to
            you with your initial questions and concerns. Do the responses directly address
            your issues?
       g) Convenience - Is the the Broker's office and/or Brokerage Firm easily accessible
            for meetings and discussions?
       h) Compatibility - Does the Broker share your Benefits Philosophy in structuring
            your and the Employee's Benefits. Is the Broker easy to work with and fully
            understanding of your and your employee's financial constraints? Are you
            culturally compatible?

3) Asking the following questions should assist when interviewing Broker candidates. The Broker should be experienced in working with Organizations of your size and industry.

          a) What differentiates you and your firm?
        b) Given our discussion, what problems can you solve for my Organization and my
            Employees?
        c) What other clients have you worked with having similar problems?
        d) Can you provide me choices of Health Plans, the option of Self-Funding, other
            Core Benefits and choices of Worksite/Voluntary Benefit Plans that are at the
            cost and discretion?
        e) Are you experienced in the implementation of Section 125 Plans: Premium
            Conversion, Dependent Care, Medical Reimbursement, Transportation Plans
            (if applicable)
        f) How will you communicate the benefit choices to the Employees.
        g) What methods can you offer for enrollment, what will be the cost of each
            choice, and who will pay?
        h) When my Employees have questions, who do they contact? What are the
            hours for calling?

4) When considering your Benefit and Insurance Plans you can utilize more than one Broker.

           It is not unusual, especially with larger Organizations with diverse Employees,
           to utilize more than one Broker. Individual Brokers may not have the time, or
           capacity, to fully understand the entire Benefits/Insurance marketplace.
           Brokerage Firms may have specialists in various disciplines - Core Benefits,
           Worksite Plans, Retirement Plans, Life Insurance, Buy-Sell Plans, P&C, etc.
           You can give an " Agent of Record" letter to one Broker for a specific plan, or
           set of plans, and additional "Agent of Record" letters to other firms for additional
           plans.

5) Remember - Trust but Verify!