Paul Areida

I started my insurance career in 1981 as an underwriter trainee at the Continental Insurance Company in San Francisco. The very first thing I learned was the difference between an agent and a broker. An agent represents the company to an insured while a broker represents the insured to multiple companies. Simply stated, the broker works for the insured.

The ability to quote with multiple companies is the essence of being a broker and the core value of the independent agency system. I use a broker for my business and personal insurance because I know they will be quoting my insurance prior to every renewal and will make the best recommendation on what company I should insure with. I also know that since a broker is handling my insurance, carriers will work hard to win my broker’s business by offering quality, competitively-priced.

A broker can contact each company they represent to get a quote (usually done through web sites) but this takes a great deal of time since they are entering the same data in multiple systems. Using a comparative rater allows the broker to enter the data once and receive multiple quotes from various carriers. If you think about it, comparative raters were the first to accomplish SEMCI (Single Entry Multiple Company Interface). Quite simply, comparative rating is a necessity for any broker and the main difference between a direct writer and an independent broker. Both service insured, report claims, take payments, issue certificates of insurance but only an independent broker offers comparative quoting.

I have heard many brokers explain that they know the best market to put a risk with after an initial interview process. They know which companies are competitive on which risks and therefore do not need a comparative rater. I challenged this and asked a few of our brokers to keep track of where they thought the best carrier for a particular risk would be before they did a comparative quote. The best result reported without a comparative rater was that agencies correctly placed one out of five or 20 percent. Carriers appetites and pricing change constantly and it would seem impossible that any broker could keep up with these changes. Those brokers who have quit using a comparative rater and returned to use one all have a similar story: “I lost one of my good clients to a competitor who used a carrier I have an appointment with because I did not quote them and had no idea they would be competitive for this risk”. I do not know of a broker this has not happened to at least once.

Recently, I have heard from brokers that carriers are cancelling their appointments because of a lack of activity. With the advent of Real Time rating, carriers now know how much you are quoting with them. While they realize they cannot write every risk, they expect a look, an opportunity to write the business. Your comparative rater tracks this and lets you know how they stack up from a competitive point of view.

The difference between an independent broker and a direct writer is the ability to quote with multiple carriers. Your clients need to know this and you should be reinforcing this difference at every quote and renewal by providing a comparative quote. This sets you aside from the commodity direct writers and continues to demonstrate your value to your insured.

Don’t give up your competitive advantage – Use a comparative rater!