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Why Emerging Tech Shouldn’t Deal Shop Business Insurance
From attaining SOC 2 certification to meeting customer contract requirements, there are plenty of reasons companies seek out business insurance. When they do, they naturally want to seek out the best deal or lowest price for the coverage they need.
It makes sense that technology companies might reach out to several insurance agencies, hoping one of them provides a more competitive rate than the others. They think reaching out to multiple agencies increases the likelihood that their bid reaches the broadest possible swath of relevant insurers. Paradoxically, a scattershot approach to seeking out business insurance doesn’t lead to the best rates; it actually can prevent businesses from maximizing their savings.
Brokers Blocking Brokers
Let’s say an emerging tech company needs General Liability, Technology Errors & Omissions, and Directors and Officers coverage. They might first reach out to a broker – we’ll call them Broker A – before also bringing their requirements to Broker B. Because Broker A learns of their needs first, they contact all of the relevant underwriters and bring the company a quote based on input they’ve provided. Broker B tries to do this too – their relationships with individual underwriters makes them more competitive – but they can’t. They’re blocked by Broker A, who has already submitted for a quote the insurer will honor. The quote process is “frozen” once Broker A has submitted for a quote.
Broker A gets back to this company and says “Great news, I have a quote for you!” The problem is that the business has little way of knowing if the quote is competitive or whether a better rate exists. They’re effectively stuck with whatever quote the first broker you contact provides. The same process would happen if they reached out to a Broker C, D, or E. This underscores why technology companies shouldn’t contact several insurance brokers to get the best deal; they will get in each other’s way.
Choosing a Broker of Record (BOR)
Tech firms are best served by searching for and designating a Broker of Record, or BOR. BORs can manage all of a company’s coverage needs while avoiding the challenges created by working with several brokers at once. They also offer two distinct benefits: they can unblock frozen quote requests, and offer substantial savings by combining policies and leveraging their superior relationships with individual underwriters.
Searching for the right BOR involves asking two questions: “What types of coverage do you usually offer?” and “Do you have access to all underwriters in this domain?” The former question helps companies understand whether a broker is best fit for them, whereas the latter signals whether or not a BOR is willing to grow with a company as their coverage needs evolve. While you can change your BOR at any time, how a broker answers these questions can signal whether they’ll be a valuable partner when your policy needs change.
One Broker to Rule Them All
Fielding requests to different business insurance brokers is a bit like putting a home on the market with seven real estate agents at once: it creates duplicative work without yielding better outcomes. The Manhattan skyline wasn’t built by hoards of brokers hawking apartments far and wide; it’s the culmination of thousands of individually-chosen agents leveraging their relationships and expertise to secure the best possible deal. Like many things in life, the best business insurance can simply come down to who you know.
Koop’s customer assurance platform helps tech companies seamlessly navigate the complexities of business insurance, regulatory compliance, and security automation in one place.
We provide a comprehensive suite of insurance coverage that includes General Liability, Technology Errors & Omissions, Cyber Liability, and Management Liability coupled with the most cost-effective SOC 2 compliance certification on the market.
Ready to learn more? Visit our website at https://www.koop.ai or drop us a note at hello@koop.ai.
