Small Business owners are a unique brand of business person. They are hardworking and focused on getting things done. Other than employees, they rely on a small cadre of professionals to assist them in meeting the organizational goal of profitability. Attorneys, CPAs and bankers often fill the gap in the business owner’s deficit of legal and financial knowledge. Among these experts, insurance producers, that is, insurance agents and brokers, should be recognized as having a vital role in maintaining your organization’s profitability, continuity and resiliency. All too often, this role of external risk manager is delegated to an insurance agent who lacks the expertise or experience to adequately protect your business assets from the adverse effects of fortuitous loss.
Unless you are obligated to use the services of a family member to fulfill this important role, consider the following when choosing and maintaining an insurance-risk manager relationship:
- Insurance Company Relationships: Ask the insurance agent about their relationships with the insurance companies whose policies they sell. Will they be willing to negotiate insurance coverage with them on your behalf? Will they help you deal with the claims process and financial recovery if a loss takes place? You want an active insurance partner, not a salesperson who has no operational relationship with the companies they represent. You are looking for a part-time risk manager, not a full-time social relationship.
- Education: Insurance is a serious undertaking. Insurance agents must continually educate themselves and keep up on developments in the insurance industry and the businesses in which their clients are engaged. At a minimum, insurance producers are required to take ongoing continuing education classes. Look for a producer who goes beyond the minimum requirements and has acquired a professional designation such as a Charted Property Casualty Underwriter (CPCU), Associate in Risk Management (ARM) or Certified Insurance Counselor (CIC). There’s a plethora of educational programs available to an agent. Consider this: it’s unlikely you would ask a general practitioner to set your fractured hip; do not settle for a producer who fails to hone their risk management expertise.
- Industry Expertise: Knowledge of the business environment in which you operate is critical. It pays off to acquire insurance coverages developed to address the loss exposures unique to your industry. It ensures knowledge of, and relationships with, insurance companies underwriting insurance for your business sector. Insurers targeting your industry offer the most comprehensive coverage and best pricing. Their policies often integrate with each other to provide “seamless” protection. Ask the agent about the content of their “book of business.” Does it contain businesses that are in the same industry as yours?
- Access to Insurance Markets: When talking to the insurance producer about writing your insurance, you should discuss their access to the insurance market. Ask them how many companies their agency represents? With what insurance companies does their agency have an agency contract? Why do they use those companies? Do they offer the best coverage or the largest sales commission? Does the agency have a conduit to companies that underwrite nontraditional insurance coverages such as Directors & Officers, Professional Liability, Environmental Impairment or Employment Practices Liability? This insurance marketplace is known as the Excess & Surplus lines market and requires a special license. And again, does the agent represent insurers that focus on your industry?
- Support Staff: Determine the number of support staff your producer has access to and find out if their agency will assign a Customer Service Representative (CSR) to your account as your contact person. Can that CSR help you resolve billing issues, coverage changes, the issuing of certificates of insurance, claim issues, loss reserve and audit issues, or will they just pass you along to the insurance company?
Insurance is a serious undertaking; it’s complex and confusing. To ensure your financial well-being, it’s imperative to carefully select a person with risk management experience and expertise to help protect your business in dealing with the adverse effects from lawsuits and property damage.
By Brian Francis; originally published in SBAM’s May/June 2025 issue of FOCUS magazine
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