questions on their construction experience and knowledge.
File their information and note those who seem knowledgeable
and have a personality you would like to work with for an
extended period of time. Use this information to help develop
your short list.
One of the best sources of information about agents or brokers and direct or exclusive writers is other contractors. Be
sure to ask:
1) who they use,
2) how good a job their representative does, and
3) whether their representative seems
truly dedicated to serving the construction industry. If one or
two agents or brokers stand out, contact them and consider
them for your list.
Once you have a short list, start selecting who will represent
your company in the marketplace. A formal process is best:
Ask each broker to submit a written proposal that outlines its
capabilities, scope of services, and required compensation.
After receiving and evaluating these proposals, invite the top
two or three brokers to make a presentation and respond to
Don’t Seek Competitive Bids
Notice that this process does not involve asking independent
agents or brokers to obtain competitive proposals on your behalf from insurers. Historically, it was common to allocate markets to agents or brokers, ask them to obtain quotes, and then
choose the agent or broker and insurer combination that provided the most competitive package.
This is no longer a recommended practice. As a result of substantial consolidation in the insurance industry, there are few
insurers who write contractor policies, and those that do may
target different types of construction specialties.
Most likely, the agent or broker who is assigned the hottest
market for your account is going to win the competition by
default, and this will not necessarily result in your choosing
the best agent or broker. In other words, you may end up with
the best insurer, but not the best insurance representative.
It makes sense to choose the best insurance representative
that you can, so he or she can go to the market on your
behalf and bring back competitive quotes from interested
insurers for your review.
Your preliminary research indicates that a direct or exclusive
writer might be the way to go, but you are having trouble deciding between that approach and using an independent agent or
broker. In this case, you might select one independent agent or
broker and one or two direct or exclusive writers. This allows
the agent or broker to approach its insurers and compare the
best quotes with those obtained from the direct or exclusive
If You Simply Must Seek Competitive Bids
What if you or your executive management feels strongly that
it’s important to have multiple agents or brokers bid on your
business? If this is the case, use the proposal process to narrow the field to only two agents or brokers. Then, allow them
to obtain competitive bids from insurers for your review.
To avoid multiple agents approaching the same insurer,
remember to assign specific markets to specific agents. But,
only use this process if you would be equally happy with either
agent or broker serving your account. Otherwise, you may be
disappointed if your top choice submits the second best quote
simply because of the market allocation process.
In summary, you will generally get poorer results if you ask
multiple agents or brokers to obtain competitive proposals,
rather than if you choose one (or at most two) to approach the
market for you. However, if you feel strongly that this type of
competition is needed, this approach should yield the best
The RFP Process
The next step is to identify the services you need from your
insurance representative. This will certainly include all those
services that go with placing insurance, such as marketing to
insurers, checking policies, issuing certificates, and confirming audits and experience rating calculations.
In addition, consider what other services you might need,
including help with contract reviews, claims reviews, and safety program recommendations. Develop a specific list to
address any areas where you think your current insurance
representative may be falling short, and then take the following steps.
Choose Your Selection Team
To make the best decision and help ensure management buy-in on the agent or broker chosen, it’s usually wise to use a
team of managers and executives to make the selection. For
example, the team might include you as the CFM, the safety
manager, the risk or insurance manager, the corporate counsel, and the HR manager.
In a small company, the president or CEO and someone from
operations might be involved. In a larger company, the entire
risk management department (or at least several people from
the department) should be considered.