Business Insurance Quotes: How The Process Works
Every year, millions of businesses have to renew their business insurance at some point during the year. As renewal time approaches, some businesses sit back and leave things on autopilot while others proactively seek out alternative options. Of the businesses that entertain other business insurance quotes, I would estimate that 90% of them don’t truly understand how the process works behind the scenes. There’s more to the process than most are keen on and without a full understanding of how the process works, it’s nearly impossible to get the most out of the “quoting” process.
What Most Businesses Are Used To
From a business owners perspective, here’s what most folks are accustomed to:
- Incumbent agent brings in renewal from current carrier (& sometimes alternative options)
- A new agent is brought in to “shop the market” and bring quotes from other carriers
- Both agents present their best offers for the business owner to make a decision
There are two problems with this situation that the vast majority of businesses are unaware of. Let’s pull back the curtain…
What Goes On Behind The Scenes
There are two very important things for a business to understand while going through the process of getting business insurance quotes. Understanding these two nuances will help you make sure that you’re always staying on top of the market.
1 – Carriers Only Allow One Submission For A Business Every Year
Each year, whether you bring in one agent or five, the pool of carriers that write insurance for your industry will only allow one agent to send in a “submission” to them for that year. This essentially creates a “first come, first serve” situation for agents. The first agent to send in a submission to a carrier is the only one who will be able to present an quote from them that year.
What This Means for You
It’s important to understand this for a few reasons. For starters, it will save you time. Considering that only one agent can quote your business with any carrier each year, there’s truly no need to bring in more than one additional agent to put together a program for you. Also, this sheds light on the idea of “blocking the market”. Blocking the market is a little bit of inside baseball for insurance agents. Informally, it means that an agent (usually your current or “incumbent” agent) will send out submissions to every carrier months in advance to prevent any competition from other agents.
This isn’t always a bad thing. Some agents will do this because they’re truly looking to make sure their clients are getting the best deal. However, the majority of agents will do this to prevent any kind of competitive situation. Determining which of these scenarios you’re in comes down to how much you trust your agent.
2 – Carriers Are More Likely To Offer Better Pricing To Your Current Agent
But shouldn’t carriers offer the same price, no matter who the agent is? Of course they should. However, the agent who currently controls your account is 3-4 times more likely to keep your business than a new agent is to write it. That said, an underwriter is more likely to offer better business insurance quotes to your current agent. They feel as if they have a real shot since they have the inside track and an increased chance of writing the business if they stick their neck out. On top of that, when you’re current agent is going to a different carrier for a quote, they have much more negotiating power.
“So what you’re saying is that I should just have my agent quote my insurance every year?” Kinda. It’s a little more nuanced than that. In a perfect world, yes…your agent should be the only person you need to get business insurance quotes. Unfortunately, it doesn’t always work that way.
What You Should Take Away From This
As I said, in a perfect world, you work with an agent who always bring you the best quotes for your business insurance every year. That way there are no games to worry about. No “blocking the market” and no wasting your time with other agents. The solution is simple: find an agent that you trust and someone that will prove to you every year that they’re doing what’s best for you. Find an agent who has access to multiple carriers in your industry. Find someone who is willing to do the work and communicate with insurance companies on your behalf every year and show you their work.
If you discover that your agent isn’t doing that, fire them. And instead of “shopping for quotes”, start interviewing agents. Interview them the same way you would a prospective employee. Make sure they’re willing to earn your business…every year. Want to learn more? Reach out to Hunter at McHugh Insurance Group here.