Question
I've thought for a while now that I should shop around my workman’s comp insurance. My customers shop around, why shouldn't I? I didn't get around to it until recently when a local insurance salesman stopped in and asked for a chance to quote it.
After asking for some info, a few days later he came back with a quote of about $5800/ year. My premium had been about $8300 due to a claim a few years ago. After a call to my existing agent to let him know I was shopping around he asked to let me see what he could do. A day later he informed me my premium would go down to $7200 at renewal time at the end of the year because the previous claim will drop off. He also asked to let me see what else he could do. He called today and said that since I was shopping around they could drop my premium to $6250. That's about what the quote from the other agent came in at. I don't know if I should be happy about saving the money or mad because I wouldn't have received it without letting them know I was shopping.
Forum Responses
(Business and Management Forum)
From contributor A:
Don't get too upset. Most of us don't charge the best rate to every single one of our customers. Most of us would go out of business if we did.
Non-NY (generally very small) life companies have been known to pay more than 100% first year commission in their pursuit of market share. Now, there are certainly property/casualty insurers who pay more than usual commissions in an effort to buy business, but they have to do so while being price-competitive or their bought business will be transitory.
A full third of property/casualty premium as commission in general is wildly off-base, no P/C insurance company could survive in that mode, it's a cut-throat industry. When it's all said and done, the buyer shouldn't care less what commission is paid, the decision should be a function of benefits versus cost to your company.
Always shop coverage. Make your agent/broker work for the commission. Make the insurer(s) compete. If you don't shop, you won't know what else is out there. For those curious about what level of service a good broker can provide, here's how I handled it. After putting a client on the books by shopping my 30 carriers and presenting the three or four best apples-to-apples proposals, I automatically shopped every renewal.
The client saw the three or four or five best offers, alternatives from a few carriers if they wanted to spend more for more coverage and alternatives from a few carriers if they wanted to spend less for less coverage. Along with my estimate based on experience of how good the companies were at service in general, handling claims, etc.
I never cared which carrier they wanted to go with even though they all had different commission rates. It all evened out over time. The important thing was that the client got the best deal on whatever level of benefits and service he wanted and remained my client. Like I said, make your agent/broker work for your business, there are people out there who will do it.
