Common commercial insurance broker pain points

The conversation no insurance broker wants to have with a client I sat across from Mark, a business owner of 17 years, as his voice cracked. "Everything's gone. And they're not paying a dime." His manufacturing facility was destroyed by fire, but he wouldn't get the $1.8M claim payout he expected. Why? A single missed equipment inspection that broke a rule in his policy. This conversation haunts me because it could have been prevented. After looking at more than 400 commercial policies last year, I found a troubling pattern: 78% of businesses don't know they're breaking their own insurance rules. These aren't unusual clauses. They're normal conditions that many miss: • Fire system checks every three months • Updated records of equipment upkeep • Correct storage methods for certain materials Most insurance brokers focus on selling coverage instead of teaching about these rules. It's easier to talk about policy limits than maintenance requirements. But what's the use of a $2M policy that won't pay when you really need it? Now I start every client relationship with a "Policy Compliance Audit" before talking about coverage limits or costs. This one step has prevented possible claim denials worth over $12M in the last three years. What surprising requirement have you found in your business insurance policy? And honestly, did you find it before or after you had a problem?

Of the total brokerage and fees earned by insurance brokers in India, 97% is shared among 92 brokers, out of a total number of 735 brokers. The earnings of the balance 643 brokers constitute 3% of the total brokerage/fees. The Member- Non-Life, IRDAI in a recent speech had dwelt upon this aspect, stating that as on 31st March 2024, 171 brokers were classified as inactive. He has further given a call for 'rethinking distribution', as the existing agents and brokers go to the same set of customers. Sunrise sector? Well, possibilities are immense but the hurdles for the 643 brokers are too many: 1) While the biggest problem is scalability, given the huge costs involved in terms of infrastructure, skilled manpower and strict compliance and control, there are quite a few among the smaller brokers who battle for survival. One large renewal loss and their operations go into the red. 2) Investments in technology often become cash guzzlers without substantive returns. 3) Some will have to shut shop while many may have to merge with other brokers to sustain. 4) Is there a case for a sub-broking or co-broking (agreed between brokers themselves) for wider reach, economies in operation and leveraging of relationships? 5) Possibly a network of brokers on the lines of Assurex, WBN, Steadfast, etc. can be a solution too. No doubt, most of these networks work on multinational deals, but in countries such as Australia and in the UK, local networks operate too. A strict entry barrier into the network would give comfort to insurers that standards of compliance, technology, expertise would be above par. As for the network, shared expertise, perhaps some shared services and above all, better negotiation power with insurers could prove big advantages. 6) Life industry is expected to grow much faster than non-life and here brokers play a marginal role. Life insurers prefer to rake in premium from bancassurance and many of them do not even have a dedicated Broking channel The problems faced by individual agents and small brokers are almost similar, with the brokers facing a larger compliance burden. Not sure what new challenges will come about, with the impending release of the long-pending, RRC report on distribution. An excellent article by Arup Chatterjee in the last issue of iBroker magazine says it all -- Brokers can help enhance insurance penetration, provided they are allowed to do so, by the regulations. Insurance for All by 2047 -- when many of us would not be actively involved in insurance. Are we building robust structures for 2047 or battling to stay afloat in 2025? Views welcome.

⚠️ Big brokers, big clients… even bigger contract risks. If your producers or service teams are skimming past contract terms because they say “we’re not lawyers”, your clients are more exposed than they realize. Here are the top 5 contract review mistakes I see even experienced insurance pros make: 1️⃣ Skipping to the insurance section like it’s dessert 🍰 Yes, insurance requirements matter - but there are other parts of the contract that you should review from an insurance and risk-related perspective. For example, if you’re not comparing the indemnity language to the required additional insured and contractual liability coverages and looking for mismatches in scope between them, you’re missing a major risk exposure. 2️⃣ Believing a Certificate of Insurance (COI) is enough to prove coverage It’s not. COIs are a starting point - but without reviewing the required endorsements (and sometimes the full policy), you can’t confirm whether coverage actually applies the way the contract demands. 3️⃣ Ignoring the Limitation of Liability Clause Some contracts cap the other party’s liability below their required insurance limits, which leaves your client with more risk than they bargained for. 4️⃣ Overlooking unreasonable insurance limits Your snow cone vendor client? Probably should not be required to carry $20M in Umbrella. Your team should know when (and how) to suggest pushing back. 5️⃣ Avoiding contract review because “we’re not lawyers” Most lawyers are not insurance experts. You don’t need a law degree to spot insurance-related risks hidden in contracts. Your clients expect you to help protect them - that’s your lane. 💡 I train insurance brokers to confidently review contracts from an insurance and risk perspective. It helps you protect your clients, reduces your agency E&O exposure, and strengthens your team’s value. Want to empower your team to tackle contract risks head-on? Let’s connect. DM me or visit https://lnkd.in/egFZd_xa. Your clients (and your agency E&O policy) will thank you. #insurance #contractreview #riskmanagement #AssurexGlobal #brokers #ContractRiskAcademy #clientvalue

This needs to improve Your insurance broker provides the insurance market with submissions that represent your business. But surprisingly often the broker does not share that submission with you, the client, BEFORE they send it to the insurers. You really should see what your broker is telling insurers about your business, you should carefully review it and, ideally, you should sign it off before it goes out to insurers. This should be done many weeks before your renewal dates. This is critical to avoid incorrect information going out which could have disastrous effects on a future claim. Likewise, if the broker doesn’t concentrate enough on all the great points of your business and your risk management in the insurer submission, then you might not secure the best cover/premium value mix. Another point, you should ask your broker to provide you with an up-to-date list of insurable (and relevant to you) risks that are NOT currently insured. Generally, it’s not the risks that are insured that will cause you problems but rather, those risks that you thought were insured but aren’t. Common areas can include cyber, environmental and financial crime risks to name just a few. If your broker isn’t currently doing either of these two things, then you should probably undertake a broker review. We can help you with that and take 85% of the work off your shoulders.

Often mis-selling is associated with retail lines of business such as life and health insurances. These come to light because of higher claims incidence and greater publicity. But mis-selling or uninformed selling is quite rampant in corporate segments also. The only thing is that it remains submerged and doesn’t surface much since the number of claims are relatively lesser. But that doesn’t mean non-existence of issues. Recently, a prospect had his cargo claim declined for moisture damage. The policy excluded water damage other than due to ICC (B) peril. The insured could not establish the occurrence of ICC (B) peril and the claim was repudiated. Establishing fortuity in moisture damage in any case is not easy, but here the requirement of ICC (B) peril was an additional threshold imposed, which could not be met. In wet damage claims there are considerations also such as possibility of deliquescence or hygroscopic nature of cargo, climatic conditions, usage of desiccants in packing etc. The issues of inherent vice and unsuitable packing need to be ruled out. The broker did not check for subjectivities or special exclusions and simply gave an e-marine application from the insurer which came preloaded with all such coverage restrictions. Only at the time of claims the coverage restriction aspect was noticed. The customer and his broker were contemplating legal action, but what good it would serve is another question. Recently a senior underwriter told me that only some older generation intermediaries with ex-PSU background are bothered about finer aspects of coverage. Otherwise, the intermediaries are running with whatever is there on the policy unbothered about the claims implications.