The paper intensive commercial insurance product delivery system is extremely expensive, inefficient and full of limitless possibilities for service problems. This system is flawed with built-in conflicts of interest, non-disclosure and expensive product delay obstacles.

In no other business or service industry would this system be allowed to exist and flourish as it does in the highly specialized field of commercial insurance.

M. G. Boost & Associates stands for knowledge and experienced professionals. We have attempted to do things differently. Non-disclosed broker compensation, conflicts of interest, customers hiring multiple brokers and carriers willing to provide free quotes all contribute to the inefficiencies in the system.

Typically, in an effort to obtain an equitable product, many companies engage a number of brokers to “compete” on the business. The contracted brokers all work to provide risk transfer alternatives, yet only one receives the order to place coverage. Could you imagine doing this with your annual tax return? In this scenario, broker commission is usually non-disclosed, averaging l0%-15% of premium, and services rendered are inconsistent with income generated, i.e. no value equal to broker income.

The broker’s commission received subsidizes work performed where the broker is not compensated. Most brokers’ and insurers’ success rate for writing new business is less than 15% (call your carrier to verify). Significant savings can be realized by the customer in a more efficient product delivery and distribution system where broker services and remuneration are disclosed, eliminating conflicts of interest, and success ratios are improved. We feel strongly broker compensation should be based upon services provided and losses prevented, not premiums paid. 

In addition to the inefficient system, a conflict of interest frequently develops between client and broker. It is a typical business practice for the incumbent broker to access or “block” all of the available markets with applications 90 days prior to a client’s renewal date in order to selfishly protect his or her position in remuneration and ultimately control the client’s action. In doing so, the broker minimizes the risk of the client hiring a competing broker, and, more importantly the broker may not offer the client the best carrier if his compensation is compromised. Opportunities exist in eliminating the inherent conflicts by incorporating disclosed broker remuneration into the program. 

The “Fortune 500” and larger self insured employers purchase insurance, risk management, and claims administration products on a disclosed fee or percentage basis. Middle market employers ($10 to $250 million dollars in revenue) subsidize the large employers in the commercial insurance brokerage community. Bringing large employer buying habits and expertise to the middle market employers creates opportunities and significant premium cost savings.

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