What is an Insurance Broker?
An insurance broker acts as the middleman between employers and commercial insurance carriers. Expediting the search for coverage, brokers offer quick comparisons between carriers and work to get you the best plan for the best price. Brokers are beneficial when sourcing plans for small businesses, as these organizations often have more complex insurance needs.
For employers, brokers basically operate as another one of your employees. Unlike insurance agents, brokers don’t have ulterior motives to push plans from one particular insurance company. Instead, they work for you, the consumer, by representing multiple companies and offering insight into each plan’s pros, cons, and costs. Not to mention, the most experienced brokers typically have company connections to make managing your policies easier.
What is Small Business Insurance?
Small business insurance covers a company’s assets, property, and income. For example, a small business insurance plan can help protect your business from claims of damage or injury. Say a customer slips and falls at your business, or an employee accidentally damages a customer’s property. In these instances, small business insurance provides you with a safety net.
How Do Brokers Make Money From Small Business Insurance?
An insurance broker makes money from small business insurance through brokers’ fees or commissions. Most states enforce disclosure policies for brokers, requiring them to outline their commission rates and additional fees upfront. While working with a broker can save you time and money, it’s important to note that their services come with a cost.
Commission
Brokers receive a commission from insurance companies after they sell a plan to a client. Commission will vary depending on the company, the insurance plan, and whether the sale was on the first policy or a renewal. Companies typically calculate commission as a percentage of the premium, with most commission rates falling between 2% and 8% of the premium.
Broker Fees
On top of their commission, many insurance brokers often charge additional fees for their services. These fees should follow state regulations and be made clear to the consumer right off the bat. Broker fees are typically nonrefundable, even if you cancel your policy.
Working with a broker can expedite your insurance search. However, brokers can sometimes be expensive or difficult to work with. Luckily, you have other options. At MonsterQuoter, we make finding small business insurance easy! By using our tools to compare and buy group insurance plans, you’ll be able to invest in your business’ success without breaking the bank. Connect with our strategists and start comparing quotes. Then, all that’s left to do is finalize and secure your policy with a licensed insurance professional from your chosen provider!
