Business insurance broker

A business insurance broker helps to guide you and advocate for you as you navigate the world of commercial insurance, whether you’re a small business or a large corporate. They serve as your personal insurance consultant — someone who works directly for you, rather than insurance companies.

What does a business insurance broker do?

In the initial stages of your relationship, when you’re likely looking to start a policy for the first time or transfer to a new insurance provider, your broker’s main job is to understand your business and assess your risks.

Once they have a firm handle on who you are and what you do, they’re responsible for shopping around to find the best insurance coverage for you at the most competitive price. They’ll explain your options in plain English, identify and address any gaps in your coverage, and help you avoid paying for insurance you don’t need.

Your broker will also be in your corner when it’s time to make a claim. They’ll handle the paperwork, negotiate with insurers on your behalf, and work to get your claim settled fairly and quickly. This can be particularly valuable when you’re trying to keep your business on track after an incident.

Many brokers also offer valuable extras like risk management advice and regular policy reviews to make sure your coverage keeps pace as your business grows and changes.

Unlike going directly to an insurer, a broker is legally required to act in your best interest. They’re bound by strict Financial Conduct Authority (FCA) regulations to put your needs first. They can be especially helpful if your business has unique risks or if you operate in a specialist sector where off-the-shelf policies might not quite fit the bill.

Do I need a business insurance broker?

You’re not legally required to hire a business insurance broker, and choosing to work with one is a very personal decision. However, there are several situations where having a broker on hand is enormously valuable. You should consider using a broker if:

• Your business is complex or high-risk. For example, if you work in manufacturing, construction, or professional services where mistakes could be costly. A broker can ensure you have the right coverage for specific industry risks.
• You don’t have time to research and compare different policies. Brokers already have established relationships with insurers and know which ones offer the best terms for your type of business.
• You’re unsure about your insurance needs. If you’re not confident about identifying your business risks or understanding policy terms, a broker can explain everything in plain English and make sure you’re properly protected.

On the other hand, you might not need a broker if:

• You run a tiny, low-risk business with very straightforward insurance needs, like a home-based consultancy. That said, many SMEs do benefit from this service — and you may be able to use a specialist small business insurance broker to help.
• You’re experienced with business insurance and are comfortable dealing directly with insurers.
• You have the time and knowledge to research policies and compare quotes yourself.

So, is it worth getting insurance through a broker? The key is to weigh up the potential benefits. While brokers do charge for their services, they often save businesses money in the long run through better coverage and more competitive premiums. Plus, their expertise can be enormously helpful if you ever need to make a claim.

Can business insurance brokers negotiate better rates?

Yes, business insurance brokers can often secure better rates than you might get on your own. Here’s why:

• They have strong relationships with multiple insurers and know which ones are most competitive for specific types of businesses. This means they can play insurers off against each other to get you the best deal.
• Their buying power makes a difference. Brokers often place millions of pounds worth of insurance, so insurers are keen to win their business and offer them preferential rates.
• They know how to present your business in the best light to insurers. By highlighting your risk management practices and mitigation measures, they can often negotiate lower premiums.
• Beyond just price, brokers can often negotiate better terms and conditions, too. They might secure lower excesses, broader coverage, or helpful policy extensions that you wouldn’t get if you went direct.
• They also understand insurance market cycles and know when insurers are more likely to offer competitive rates. Plus, they’re aware of new insurers entering the market who might offer attractive rates to build their customer base.

How do business insurance brokers make money?

Business insurance brokers in the UK typically make money through commission and broker fees.

Commission involves receiving a percentage (usually between 5 and 20%) of the insurance premium from the insurer when they place your policy. This commission is built into the premium you pay. Some brokers also charge direct fees for their services. These might include arrangement fees, admin fees, or fees for additional services like risk management advice.

Most brokers use a combination of both methods, and they’re required by FCA regulations to be transparent about their earnings. Always ask your broker to explain their fee structure. They should tell you exactly how they’re being paid and how much they’re earning from your business.

As you weigh up your options, remember that the cheapest broker you find doesn’t always offer the best value. Their expertise should help you avoid costly coverage gaps and ensure you have the right protection for your business.

How to choose a business insurance broker

Finding the right insurance broker is an important first step on your insurance journey. The stronger your relationship with your broker, and the longer you work with them over time, the more familiar they will become with your business and your insurance needs. The following tips will help you shift the wheat from the chaff:

• Check their credentials first: Make sure the broker you’re considering working with is registered with the FCA. This is a legal requirement for UK insurance brokers. You can easily verify this on the FCA website.
• Look for relevant experience in your industry: A broker who understands your sector will know its specific risks and challenges. Don’t be shy about asking how many similar businesses they work with.
• Ask about their insurer relationships: Good brokers have access to a wide range of insurers and can offer you multiple options. Be wary of those who seem to push just one or two insurance companies.
• Consider their size and service level: Larger broking firms might have more insurer relationships, but smaller firms often provide more personal service. Think about what matters most to you.
• Get some client references: A reputable broker should be happy to provide testimonials or put you in touch with existing clients for feedback. Review websites like Trustpilot can also give you insight into people’s experience working with a particular broker.
• Compare their communication style: Do they explain things clearly? Are they responsive? You want someone who speaks your language and doesn’t baffle you with jargon or leave replies hanging for weeks.
• Look at their claims handling: Ask about their process for handling claims and what support they provide. A good broker should be just as attentive after you’ve bought the policy as before.
• Review their fees and charges: Make sure you understand how they’re paid — whether through commission, fees, or both. They should be completely transparent about this.
• Trust your instincts: If a broker seems more interested in selling you policies than understanding your business, keep looking. The right broker should feel like a trusted adviser who’s genuinely interested in protecting your business.

What questions should I ask a business insurance broker?

Keeping the points above in mind, have the following questions on hand as you interview potential brokers:

About their experience

• How long have you worked with businesses in my industry?
• Can you share examples of similar businesses you’ve helped?
• What makes you different from other brokers?

About their service

• Who will be my main point of contact?
• What’s your typical response time for queries?
• How often will you review my policies?
• What support do you provide when making a claim?

About coverage

• What risks do you think my business faces that I might not have considered?
• How can you help me avoid being underinsured?
• What exclusions should I be particularly aware of?

About costs

• How are your fees structured?
• Do you earn commission from insurers?
• How do you ensure I’m getting competitive rates?
• Are there any additional charges I should know about?

About claims

• What’s your claims success rate?
• Can you walk me through your claims process?
• Will you negotiate with insurers on my behalf?

About their relationships

• Which insurance companies do you work with?
• Are you tied to particular insurers?
• How do you choose which insurers to approach for my business?

A good broker will answer these questions openly and clearly, helping you feel confident in their ability to protect your business interests.

Are business insurance brokers worth the cost?

An insurance broker can be a valuable investment for your business, particularly given the complexity of the insurance market. The right broker acts as your advocate, leveraging their market knowledge and relationships with insurers to secure appropriate coverage, often at competitive rates.

While their fees add to your costs initially, brokers can save you money in the long run by ensuring you’re neither underinsured nor paying for unnecessary coverage. They’re particularly worth considering if your business has specific risks or operates in a specialist sector, as they can provide expert guidance on coverage requirements and help navigate the claims process should you need to make one.

Related articles:

• The advantages and disadvantages of using insurance brokers
• Types of business insurance you should know about
• New legislation impacting your business
• READ MORE BUSINESS INSURANCE GUIDES

Are you looking for insurance cover to support your business? Get in touch with us! A member of the Howden team would love to help you find the perfect policy!

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