A consultant representing lenders for commercial properties is encouraging insurance brokers to make sure their commercial clients have adequate coverage, urging them to resist taking the easy path by not having tough discussions with their clients over price.
"Brokers never want to charge their client more than they have to," said David Truscott, president of Risk Review Inc. told Insurance Business. "That’s a respectable position, but sometimes that comes at the expense of not getting a thorough job done."
Truscott emphasized several times that most brokers do a good job of providing adequate insurance protection for their commercial clients, balancing the type and price of coverage, as well as making sure the detail work is accomplished.
They do this, he noted, despite several pressures on brokers to cut corners and/or maintain relationships.
For example, sometimes brokers may be reluctant to make sure their clients’ interests are fully protected because the time and effort required to do so may not bring a proportionate value to the brokerage. Or perhaps, through inexperience in the field, they simply don’t know the client’s exposures as thoroughly as they should. Still others are under pressure to maintain relationships with their clients, at the expense of making a case for them to come up in price to purchase more expensive – and comprehensive – coverage.
“So either through the lack of knowledge on the part of the broker, or laziness on the part of the broker, or a reluctance to annoy the client, sometimes the business entities may not be entirely adequately insured,” Truscott said.
Most brokers, however, “endeavour to thoroughly understand their clients’ exposures. They analyze all exposures to loss and they make appropriate recommendations, where insurance would apply, to protect their clients against those exposures to loss.”
Education is a key for brokers in making the right recommendations to their commercial clients, Truscott noted.
“There is no shortage of sources for knowledge in this industry,” said Truscott. “Brokers should be open-minded about what they can learn from others – what the broker can learn from their clients; what they can learn from their peers; what they can learn from formal industry education; and what they can learn from outsiders.”
In the context of lending to a broker’s commercial client, brokers can learn about the client’s exposures by reading the lender’s requirements or what’s contained in their insured client’s property lease. “All they have to do is read through it and when they come across a term they don’t understand, Google could become their best friend,” Truscott said.
And last but not least, he added, brokers can always consult with the legal community. “These days, lawyers don’t profess to know everything about the insurance business, but they are great people to run a question by related to a concept,” he said.