Members of SRMC are frequently asked, or are compelled to explain, just how they differ from agents or brokers. We offer the following frequently asked questions and thoughtful responses to help you differentiate between consultants and those who sell insurance products.
“Don’t all insurance professionals consult or offer professional advice?”
Of course they do, but when comparing consultants with brokers or agents, you need to consider their perspective and objectivity. Members of SRMC are independent risk management consultants and do not sell insurance. They are not affiliated or associated with firms or individuals that do sell insurance either. Independent consultants are paid by their clients and never receive a commission. The potential gain or loss of commission income never enters into their decision-making process thereby eliminating any potential conflict of interest.
“Can't insurance agents or brokers provide the same services as an independent consultant?”
If you looked in the yellow pages under “insurance consultants,” you might think they do provide the same services. The fact is, you’ll probably find many firms listed under “insurance consultants,” but most of them are actually insurance agents or brokers. Look carefully, and you will find that virtually all of the agents and brokers listed under “Insurance Consultants” in the yellow pages will be listed under “Insurance Agents” or “Insurance Brokers” in the same phone book!
Everyone would like to be all things to all people, but when it comes to providing objective advice, you have to be objective every day. Agents and brokers may like you to think that they can provide the same objective advice as independent risk management consultants, but they can’t. There is no way for a broker/consultant to advise you on what insurance to buy or not buy today, when the same person or someone from their firm, will turn around and try to sell you an insurance product the next day. Remember the primary business activity of all agents/brokers is insurance sales.
“We’ve used the same brokerage firm for years and would prefer to engage them for some consulting projects.” “Is there any reason why we shouldn’t?”
There are a couple of things to keep in mind. Reports and recommendations from agents and brokers may be viewed with some degree of skepticism if those individuals are perceived as having something to gain from their recommendations. “What could be gained?” you ask. Agents and brokers retained for consulting-type projects have ample opportunities to gain “inside information” that can prove invaluable at some point when they decide to solicit your insurance business.
Here’s another thought. Some projects, such as the handling of a competitive bidding process, can produce less than optimum results if handled by a broker. Other agents and brokers may be reluctant to participate or offer their best proposal if they suspect that their proposal will receive anything but the fairest consideration.
Using an independent risk management consultant assures objectivity and fairness. Your projects won’t be compromised by any ulterior motives or the perception by others that an ulterior motive may exist.
“My agent has several professional designations, shouldn’t that count for something?”
Absolutely yes. But in what area has your agent concentrated? Many agents and brokers will be most proficient in the area of insurance (since that is the focal point of their sales efforts). They may not be as proficient in other keys areas such as alternative risk financing and non-insurance risk transfers. An Agency/Brokerage staff is comprised primarily of “producers,” individuals charged with bringing more policyholders into the firm. Many times, these sales people lack the technical capabilities to solve your complex risk management problems that involve issues beyond the purchase of insurance.
An independent risk management consultant is well versed in all areas of risk management, not just the use of insurance.
There are several differences between independent risk management consultants and agents/brokers. When selecting between them, keep in mind their perspective, objectivity, experience and qualifications. Naturally, we hope you select a consultant who is a member of the Society of Risk Management Consultants. Only then will you be sure you are selecting a consultant who is objective, experienced and qualified.