You may be wondering about why you should hire me, or what the benefits of an independent insurance consultant truly are. It is for this reason that I’ve provided answers to some frequently asked questions regarding whether or not your organization should hire an independent, fee-based insurance consultant.
Q: What is an independent insurance advisor or risk management consultant?
An insurance/risk management consultant (a.k.a. Constructive Risk) is an expert who can be hired on a per-project or retainer basis to help solve specific problems. I provide unbiased advice on not only conventional insurance, but also on topics like self-insurance, claims management, loss prevention, and project advisory. Many people, including maybe even your current insurance agent, call themselves “consultants” even though most or all of their income (i.e. “commissions”) is derived from sources other than client fees. Such people are are not independent consultants but are actually:
- Insurance agents, brokers, and others who sell insurance and insurance-related services and, therefore, cannot give you objective advice due to their compensation being tied to a “commission.”
- A host of specialists in risk management-related fields such as safety, environmental, fire-protection, and claims-management.
Q. What does an independent insurance advisor or risk management consultant do?
The work performed by insurance and risk management consultants (a.k.a. Constructive Risk) can be divided into three general classes: audits, retainers, and special projects (e.g. insurance renewal bidding). They are typically paid a flat-fee and their compensation neither increases nor decreases based upon the increase/decrease of insurance premiums. Thus, their advice is objective and always in the client’s best interest.
Q: Don’t all insurance professionals (like my current agent/broker) advise or offer professional advice?
Possibly, but when comparing my advice with that of your current insurance broker/agent, you need to consider their perspective and lack of objectivity. Independent risk management and insurance consultants do not sell insurance. For example, Constructive Risk is not affiliated or associated with any firms or agencies that sell insurance or receive commission, overrides, “kick backs,” or other “under the table” compensation. Independent consultants are paid by our clients (the business owner) directly and never receive a commission, gift, or kickback. The potential gain or loss of commission income never enters into the decision-making process, thereby eliminating any potential conflict of interest. At the end of the day, the primary business activity of all agents/brokers is insurance sales, not the best interests of the client.
Q: I’ve had the same broker/agent & insurance carrier for years — so why change?
Simply put, an insurance broker has little incentive to reduce your policy premiums, uncover gaps in your coverage, and/or seek out no-cost endorsements that can expand coverage. To reduce insurance premiums reduces the insurance broker’s commission, which is typically his/her only form of income. In addition, your insurance broker is only as good as the companies his/her agency has access to. There are many cost-competitive, industry-specific programs available to you, but your broker may not be appointed with that program/carrier. As an independent risk management consultant, I am bound only to my clients and do only what is best for you. My decisions are never skewed by insurance companies since I do not accept commissions, gifts, overrides, or engagements from them.
Q: How do you get paid for your services?
I am compensated by you (the client) directly, based on either a pre-set annual or project fee which is agreed upon in advance. The fee reflects the complexity of the project and resources required. I have found that clients like the budgeting stability of this flat-fee structure. My clients have enjoyed the fact that my fixed-fee is typically more than offset by the substantial insurance premium savings I gain for them.
Q: What is your fee structure? (How much do you charge for your consulting services?)
Typically my pricing structure is set for my Online Products and most of my Consulting Packages, but can also be determined on a case-by-case basis and is dependent on what I’m being hired to do. If I’m being hired to handle an organization’s insurance policy renewal process (bid management), then my compensation is typically a fixed annual fee. Although every project/company is different, my fee normally ranges between .05% – 2.5% of a company’s total annual insurance policy premium, with a minimum guaranteed annual compensation of $3,500. (See below for how my fee pays for itself.)
Q: How much money can we expect to save from hiring you?
- Every project and every organization is unique. However, when hired to manage an organization’s insurance policy renewal process (bid management), my clients typically average total annual insurance premium savings of anywhere between 9% – 50%.
- Moreover, my clients have saved ten of thousands of dollars from “sunk” and/or “hidden” insurance costs (i.e. retail & wholesale broker fees, state taxes and fees, final audits, deductibles on claims, etc.). Therefore, my clients have saved money in negotiated premium savings as well as from “hidden” fees/commissions.
- Furthermore, I have generally found that my client’s insurance agent/broker will lower his/her commission percentage to compensate for my fixed annual fee, either in whole or in part. Therefore, I have never had a client not save considerably more money than my fixed fee. In fact, my clients typically realize double-digit (on a percentage basis) savings in premiums and sunk costs by utilizing my bid management services.