What is an insurance broker, and what do they do? Also, what’s the difference between an insurance broker and an insurance company?

Have you asked yourself these questions? You wouldn’t be the first to ask. There tends to be a bit of confusion between what an insurance broker does and how it compares to what an insurance company does. Though the two work together, they are unique entities that provide different services to their customers. Without further ado, let’s go through the differences between each:

What Is an Insurance Broker?

An insurance broker is licensed to sell insurance policies to people. Most, but not all, insurance brokers work at a brokerage, an independent firm with many brokers. For example, Zensurance is a business or commercial insurance brokerage that employs several individual licensed brokers. Our brokers are trained and licensed by self-regulating industry bodies in each province we serve. For instance, in Ontario, our brokers are licensed by the Registered Insurance Brokers of Ontario (RIBO).

An insurance broker talking to a client

Although brokers sell insurance, they don’t work for one insurance company as an agent does. Instead, they work for their customers. In other words, they work for you. When you fill out an online application for a business insurance policy, our brokers can approach  our partner network of more than 50 insurance companies to find you the right policy at the lowest price available.

What Is an Insurance Company?

An insurance company is a corporation that provides insurance policies to its customers. Insurers might be able to offer insurance policies directly (if someone contacts them by phone or online) and indirectly (through insurance brokers).

An insurance company assesses a small business owner’s or entrepreneur’s level of risk when considering their application for coverage. For instance, when you fill out a business insurance application with Zensurance, among the things you are asked is where your business is located, what products and services you offer, and what your company’s annual revenue is. You’ll also be asked how many years of experience you have, how many employees you have (if any), if you use vehicles for business or not, and how many previous insurance claims you may have filed. Insurance companies want to know these details to determine what annual premium (a.k.a. the price of a policy) to charge.

So, in addition to issuing policies, an insurance company collects a premium from you. If you need to file a claim (for example, if a fire damages your business’s workplace), the insurance company pays out that claim and provides you with financial support.

Who Sets the Price of Insurance Rates?

Your insurance company sets the price you will pay for your business insurance policy, not your broker. However, not all insurance companies charge the same amount to purchase a policy. The cost of a policy can vary significantly between different insurers.

Even if you haven’t filed any claims, premiums may fluctuate year-over-year depending on a variety of factors, including:

  • The state of the economy
  • The total cost of claims an insurer paid out the previous year and how much it expects to pay in claims in the year ahead
  • The cost of insurance fraud
  • The commissions paid to brokers
  • The insurance company’s operating expenses
  • The insurance company’s profit margin (like any business, if an insurer isn’t profitable, it won’t be in business for long)
  • The cost of reinsurance (even insurance companies buy insurance to ensure they remain solvent in case of a catastrophic loss)

Why Should You Choose an Insurance Broker?

There are four primary reasons why you might want to consider partnering with a broker to help you fulfil your insurance needs:

1. Advocacy and guidance

An insurance broker works for you, not an insurance company. That means they partner with small business owners as their trusted advisors. They give advice and help define and explain the often-confusing language in an insurance policy and advise business owners on the types of coverages and coverage limits they need. Although you as the customer have the final say on what insurance you buy, your broker can help you make informed decisions and will customize the policy to suit your unique business needs.

2. Claims handling

Why do we buy insurance? In case something goes wrong, and you suffer losses, damages, or are sued. That’s when you file a claim for financial support to help cover those costs. While your insurance carrier decides whether to pay out the claims it receives or not, it’s your broker who you file a claim with and goes to bat for you to ensure you are informed, supported, and that your claim is honoured. A broker ensures your claim is managed quickly and efficiently and can help keep the insurance company accountable. If your insurance company rejects your claim and you wish to dispute its decision, your broker can speak to the insurer directly and have them review the claim and reconsider the original decision.

3. A greater amount of choice

When you partner with a broker, that broker will comb through insurance policy options and prices on your behalf to find you the right coverage at the best premium or price they can find. The more insurance company partners a broker has in their network, the more options for you (and Zensurance has more than 50 insurance carriers in its network).

4. Licensing and regulation

All Zensurance brokers are licensed through RIBO and other provincial regulatory bodies. The licensing requirements are strict, and the training and certification brokers must complete is not a walk in the park. In other words, when you partner with a Zensurance broker, you’re dealing with a highly trained professional who is accredited in the provinces they sell insurance. They are accountable for their actions through the provincial regulatory bodies.

Why Choosing a Small Business Insurance Broker Is Your Best Option

Ultimately, choosing to go with a business insurance broker provides you with the level of customer service and care you deserve. You want to protect your business and finances, but you also need it to be affordable to do so.

Brokers strive to act in your best interest and provide personalized, honest service by offering unbiased recommendations. They specialize in serving your industry and understand all the nuances and terminologies in insurance policies. And since they’re not beholden to any one insurance company, they can provide you with multiple options at various prices to help you get the customized policy you require.

Fill out an online application and get a free, non-obligatory quote from Zensurance. Let our broker team prove that we can protect you and your assets at a reasonable cost.


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