Anyone considering a career as a commercial insurance broker might want to understand some of the day-to-day broker responsibilities before making a decision.
Below is a description of the typical duties of an insurance broker when it comes to renewing a commercial property policy.
Starting the Renewal Process
Approximately 120 days before the policy renewal date, the broker begins the process by pulling out the coverage application from the prior year as a basis for completing the current year’s property renewal application.
Knowing the client is busy with the day-to-day operations of the business; insurance brokers do what they can to facilitate the renewal process by completing as much information as possible on the property application. After updating what he can from the information gained throughout the policy year, the broker sends the old application (as a point of reference) and the new application to the insured for completion.
Following up for the Property Application
In approximately two weeks, if the broker has not received the completed and signed renewal application there is a follow up. Because of stiff competition, it is important to get the completed application along with the necessary underwriting information in front of the insurance company underwriter at least 90 days before coverage renewal. Therefore, a tight follow up is kept in order to receive and process the information in a timely manner.
Some of the pertinent information required for a commercial property renewal include (but is not limited to):
- Schedule of locations
- Building Values
- Content Value
- Square Footage (which use is used to calculate the building value using Marshall & Swift)
- Updated Business Interruption worksheet
- Electronic Data Processing values
- Employee Loading (concentration) This requirement evolved as a result of terrorism. Insurance underwriters now want to know number of employees on each floor, proximity of each location and type of security at each location.
The insurance requirements vary depending on the coverages included on the property policy.
Once the completed renewal application is received, the broker reviews it to ensure all questions were answered. Then he submits the application to the underwriter along with indications of what it would take in the form of premium and coverage to retain the account and to keep the client happy (from the broker’s standpoint, it is much easier to retain an existing client than to go out solicit a new one).
The Policy Underwriting Process
Astute insurance brokers do not totally rely on the current insurance company as the sole source of renewal quotes. When submitting the property application, the broker requests a copy of updated property loss runs. This data is necessary to submit to other insurance companies at renewal as a backup in the event the incumbent either no longer wishes to renew the coverage or institutes unacceptable terms or conditions. A broker must be prepared to offer the client alternative quotes.
Following Up for Property Insurance Quotes
Underwriters are given approximately 30 days to review and quote the property policy. During the 30 day period of time there are usually conversations back and forth between the underwriters and the broker ironing out terms conditions and premiums. Brokers must document each of the conversations in their underwriting file (necessary in the event of an audit).
Receiving Property Insurance Quotes
Under ideal situations, approximately 60 days prior to renewal, the broker receives the property insurance quotes from the incumbent and the alternative carriers. The broker then analyzes the quotes and prepares a proposal for the insured.
Approximately 45 days prior to renewal the proposal is presented to the client for review. Depending on the client and the size of the property renewal, this is done either via email, snail mail or in person. The client gets a chance to review the proposals, ask questions, request modifications (and undoubtedly premium reductions) before making a decision on which property program is best for the company.
Binding and Billing the Insurance Coverage
In a perfect world, the insured provides the broker with the authorization to bind coverage at least 15 days prior to renewal. At that time the broker binds coverage, obtains a confirmation binder from the insurance company, invoices the policy and makes arrangements to have renewal certificates of insurance (if required) prepared and mailed to the necessary certificate holders.
Bringing the Property Renewal to a Conclusion
It’s not all over until the insurance company issues the property policy, it is checked for accuracy, forwarded to the client and the premium is paid. Some of the larger brokers receive electronic insurance polices and, depending on the client’s wishes, it is either printed and mailed to the insured or emailed in the electronic format.
In a Perfect Insurance World
The process described above won’t apply to each and every insurance brokerage firm. When it comes to renewing a property insurance policy, the size of the brokerage firm, the size of the account and the coverages included on the property policy all affect how the renewal process is handled.