Insurance brokers are a very important part the the commercial property and casualty insurance industry. They work directly with company executives providing guidance and advice around exposures and potential risks a particular business might face. These insurance professionals not only develop a comprehensive insurance strategy for their customers, they often also negotiate the procurement of the appropriate insurance policies from the insurance carriers.
In some cases, more sophisticated and experienced brokers are able to provide a level of insurance consulting that will deliver a highly custom insurance package that often includes speciality lines of coverage from boutique carriers. They may also bring in additional brokers or agents with industry or risk-specific experience the same way a legal firm will assign attorneys that specialize in the particular area of law that a project falls under. However, because of the time intensive nature of this approach, the costs are usually much higher and the broker will most likely charge a risk management fee in addition to the cost of premium. While this strategy can be extremely valuable to larger companies with unique risk and exposure profiles, most small and medium-sized businesses don’t require this level of service. And the reality is that most brokers know the value they bring isn’t applicable to smaller companies or startups. This helps explain why so many business owners struggle to find a commercial insurance broker who will return their calls, let alone place their coverage.
As an example to help illustrate the price of the consultative broker approach to insurance, premium usually accounts for approximately one third of the total cost of risk. So, if you are a small business with $500 a month in commercial insurance premium, you can expect to pay an additional $1,000 per month in risk management fees. This is a common and expensive challenge faced by small and medium-sized businesses throughout the country when they attempt to purchase their business insurance through a traditional insurance broker.
Here at Layr, we’re using technologies like big data, machine learning, and artificial intelligence to automate the consultative service provided by larger traditional insurance brokerages and making it accessible to small businesses. Much like TurboTax uses technology to intelligently walk tens of millions of Americans through the complex process of completing their taxes each year, our insurance platform helps business owners and entrepreneurs understand the specific insurance policies and limits their company needs, or doesn’t need, and allows them to purchase the coverage from A, A+, or A++ rated insurance companies who want to work with small business. We do all this without the additional cost of a substantial risk management fee.