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What does it mean to work with an independent insurance broker?

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August 15, 2022

If you're shopping for insurance, you may be wondering whether it's better to work with an independent broker or a larger brokerage group. There are pros and cons to both, but ultimately it comes down to your business goals and what fits your unique needs.

Independent insurance brokers are typically smaller operations, which means they can offer more personalized services and specialized products. They may also be more nimble and responsive to your needs, since they're not bogged down by bureaucracy and layers of internal authority. On the other hand, larger brokerages may have more staffing resources and a wider variety of products to choose from, as they are targeting a wider audience and must act as generalists instead of specialists.

It is also important to consider the stage of your company and your goals. Are you a hyper-growth start-up, or a more traditional business in an established industry? If you are a start-up you may need to communicate with your broker on a quarterly basis to ensure the policy is still properly protecting your business, since things are changing so rapidly. This would lend itself to working with a boutique, independent operation which can pay closer attention to your individual needs.

Ultimately, the best insurance broker for you is the one that can offer the right combination of personalized service, competitive prices, and products for your unique needs. If you're not sure where to start, it's worth getting in touch with both independent and larger brokerages to see who can offer the best proposal. 

For example, if you are a technology company, you will want to work with a brokerage which has a deep understanding of the technology industry’s risks, such as intellectual property and the storing of personal private information. In this case, you will want to set aside some time to do some research and tap into your business network to see who specializes in this sector and what options there may be.

Below are some different brokerage models you may encounter during your search:

Direct Writer

A direct insurance writer is an insurance company that sells products without going through an independent broker. That is, the agent you are working with is employed by the insurance company itself. The advantage of working with a direct writer is that they may provide exclusive pricing or coverage, since you are working directly through their captive agent with no middle-man. However, the downside is that you won't have as much choice when it comes to products and coverage, as they are only representing a single insurer instead of multiple.

Insurance Brokerage Franchise

An insurance brokerage franchise is a type of independent insurance broker that is part of a larger company whom they pay a percentage of their revenues, to utilize their systems and branding. These franchises may have access to more resources and a wider variety of products than smaller independent brokers. However, they may also be less nimble and responsive to your individual needs and restricted in which insurance companies they have access to.

Insurance Brokerage Group

An insurance brokerage group is a collection of independent insurance brokers who have banded together to offer their services. These groups may offer a wider variety of products and services than independent brokers, but they may also be less personalized.

Independent Insurance Broker

An independent insurance broker is a type of insurance broker that is not affiliated with any one particular company. This means that they are free to offer a wide variety of products from different insurers, and they are not limited to the products of just one company. Independent insurance brokers typically have more experience than those who work for a single insurer, and they may be more likely to offer independent advice. However, they may also be less familiar with the products of a particular insurer, and they may not have access to exclusive deals or discounts.

Is it better to work with a larger insurance brokerage or a smaller one?

This depends on your needs. If you're looking for a more personalized service with specialized products and expertise, a smaller independent broker may be a better fit. However, if you're looking for a wider variety of products and services, a larger brokerage may be a better option. Ultimately, the best insurance broker will be one who understands your business goals, has experience working in your industry, and prepared to offer multiple options which provide you choice.

If you are a business owner and interested in exploring what insurance brokerage options there are, we are happy to help and guide you through this process.

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