You may be ready to hire me, or possibly just wondering what strategic and cost-saving rewards you’d receive if you retained a wholly independent insurance & risk management consultant as part of your staff.
It is for reasons such as these that I’ve provided answers to some Frequently Asked Questions regarding whether or not your company would profit by having someone like me as part of your team.
Q: What is an independent insurance advisor or risk management consultant?
An insurance/risk management consultant is an expert who can be hired on a per-project or retainer basis to help solve specific problems. Under Constructive Risk, 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 own 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 products (i.e. “policies”) and, therefore, cannot give you OBJECTIVE ADVICE due to their compensation being tied to a “commission.”
Q. What does an independent insurance advisor or risk management consultant do?
The work performed by insurance and risk management consultants—such as my firm: Constructive Risk—can be divided into three general classes: audits, retainers, and special projects (e.g. insurance renewal bidding). I am typically paid a flat-fee and my compensation neither increases nor decreases based upon the increase/decrease of insurance premiums. Thus, my advice is objective and always in my client’s best interest.
Q: Don’t all insurance professionals (like my current insurance agent) 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. As an independent risk management and insurance consultant, I do not sell insurance. For example, my company does not represent any firms or agencies that sell insurance or receive commission, overrides, “kickbacks,” or other “under the table” compensation. Independent consultants—such as myself—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 necessarily the best interests of the client.
That last sentence may seem a bit harsh, but it is 100% true and correct.
Q: I’ve had the same broker & insurance carrier for years — so why change?
PLEASE NOTE: You don’t have to change your agent in order to hire me as your independent insurance consultant. In fact, I rarely advise a client to change agents, unless the incumbent agent simply is not doing an adequate job.
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 and, therefore, your agent will not bring that knowledge to your attention, for fear of losing your account (i.e. “commission”). As an independent risk management consultant, I am bound only to my client (the Business Owner) 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 (my client, the Business Owner) directly, based on either a pre-set annual retainer 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?
Typically, my pricing structure is pre-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 by you to do. If I’m being hired to handle an organization’s insurance policy renewal process (Competitive 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. (See below for how my fee pays for itself.)
Q: How much money can we expect to save if we hire you?
- Every project and every organization is unique. However, when hired to manage an organization’s insurance policy renewal process (Competitive Bid Management), my clients have typically averaged total annual insurance premium savings of anywhere between 9% – 55%. (55% is the most to-date I have ever saved for one client in one full year.)
- 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.