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4 min read | Published 09/07/2024
Most of us are familiar with buying motor, home and travel insurance. We often know what we need and what we can do without. But the same can’t always be said about business cover, which is why insurance brokers can help.
Your company is unique, and the distinctive nature of your operation affects the type of business insurance you should get. But what policies do you need? And how can you be sure you’re not missing vital cover?
Insurance brokers can help with these issues. They are well-placed to identify what business insurance individual companies require and find the best cover.
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An insurance broker is a middleman who works between insurance companies and potential policyholders. They find the right business insurance policies for people who are unsure about what they need and where to find it.
In the world of general insurance, this could mean finding insurance for a rare, left-hand-drive imported car. Or home insurance for someone living in a windmill. With business insurance, brokers find the right protection for each client company at the right price.
Business insurance brokers serve as a bridge between firms and business insurers, so many of them don’t sell directly to policyholders. Put simply, they offer a range of services that streamline what could otherwise be a complex process.
Here are some of the services that business brokers offer:
1. Expert advice
Insurance brokers have a wealth of experience and expertise based on years of scrutinising different policies.
They’re independent, meaning they don’t favour particular insurers.
They know what cover firms working in different sectors need or should consider.
They’re authorised by the Financial Conduct Authority (FCA), meaning they can offer general financial advice and recommendations.
2. Personal service
No two businesses are the same, even if they work in the same field and compete for the same customers. Brokers spend time with their clients to gain a thorough understanding of their business model.
They don’t just focus on the business as it is. They also consider how the company may change, including any plans to expand or hire staff.
They can find policies that offer required benefits as standard rather than as optional extras, helping to keep costs down.
3. A wide reach
As many insurers don’t sell business policies directly, it’s difficult for the public to get the best cover without an intermediaries’ help.
4. Time savings
Getting adequate business insurance is essential. But it can take time, and time is money. A broker can take on the burden of finding cover.
5. Claims support
A broker’s relationship with its clients doesn’t necessarily end once they buy a policy. If you need to make an insurance claim, your broker can work with you to smooth the claims process. This includes speaking to the insurer on your behalf.
6. On-going advice
Insurance brokers can offer more than help with buying cover. They can give on-going support and advice, which could be particularly useful if you are thinking of changing the structure of your business. For example, a broker could advise on whether you need employers’ liability insurance if you plan to employ sub-contractors.
They can also advise you if a policy’s level of coverage has changed, which could affect your decision to renew or consider alternatives.
There's a variety of advantages to using a broker. Highlights include drawing on the expertise of professionals who know the sector inside out, help with making claims, and personalised advice on your business’s needs.
Negotiation skills help if there is a disagreement about whether a claim is valid.
Legal compliance checks make sure your business complies with any legal requirements. For example having employers’ liability insurance if you employ staff.
Other compliance checks guarantee you comply with any requirements of relevant regulatory authorities or trade bodies. For example, solicitors must have adequate professional indemnity insurance.
Regular reviews, including creating a business continuity plan. These can ensure your business always has the right level of cover.
Quality: As with any service provider, there are good and not-so-good brokers. Always do your research, look at reviews, and seek out recommendations.
Cost: This is only a problem if you end up with an overly expensive or inadequate policy. Always ask about how they charge for their services, and whether they charge fees on top of the commission they earn.
Bias: Some brokers may favour certain insurers, which could mean they overlook the best policies and insurers. Reviews should help you avoid these rogue brokers.
Pricing can vary from insurance broker to insurance broker.
In general, insurance brokers tend to earn commission rather than charging an up-front fee. For example, 7.5% of a professional indemnity insurance policy’s cost is likely to be the broker’s commission. But, you shouldn’t notice the cost with a good broker because they can source quality cover at a lower price than you.
Using a comparison site or an insurance broker can be beneficial. For example, if you’ve recently set up your business, or it’s just gone through a period of growth.
In these types of situations, you may need some support to make sure that you’re getting the right types of cover for your business.
But that doesn’t mean you necessarily need to draw on a broker – your trade association may be able to help instead. But if your business model has changed, a broker could help. For instance, they can advise whether you need public liability insurance or professional indemnity cover.
You could also use a broker for some types of business insurance and comparison sites for others. Certain insurance is more straightforward, such as van insurance or goods in transit insurance, so you could source these independently.
We can help you find the right insurance policy through our partner, Simply Business.
If you want to learn more, here are some things to consider before you start looking:
Look for brokers that specialise in your trade or the area of insurance you want. The British Insurance Brokers’ Association (BIBA), trade associations and Citizens Advice should be able to point you in the right direction.
Read reviews and get recommendations.
Once you start to find brokers that you think might be suitable:
Quiz them about their services, experience and fee structure.
Speak to more than one broker before deciding which to use.
Finally, if you find a broker independently, always check they are FCA-authorised and appear on the Financial Services Register.
Alex joined in 2019, bringing his expertise to a range of roles working in both the Analytics and Commercial teams. More recently he has stepped across to focus on Product, where he’s been focusing on scaling up the teams’ SME offering.
