Using Insurance Brokers as Trusted Business Advisors

Insurance brokers have unique perspectives to share and should be included on your nonprofit organization’s team of trusted business advisors (“TBAs”). Insurance brokers are an organization’s first point of contact in the selection and purchase of insurance policies, and serve as an intermediary to the insurance carriers when questions, claims, and other risk management considerations arise. This experience makes your insurance broker an important resource in many aspects of risk management.

A good insurance broker can do much more than help you shop for and renew policies. Part of a broker’s job involves understanding risk management from the insurance company’s perspective. Thus, they often have insights into the policies and operational practices that can mitigate risk and make an organization more attractive to insurers.

Mike Kelly, a partner at AHT Insurance, recently shared how he approaches this process:

"I work with an organization's risk stakeholders (the risk management committee, audit committee, key personnel, or the full Board) to help them identify the top 10-15 organizational risks. Not necessarily just insurable risks, but all the risks to the organization in general. Then we think about what’s being done to mitigate these risks. This process is about strengthening the overall risk management function, which improves the organization's risk profile. If I can communicate this to the insurance company, this should get them better terms, conditions, and pricing.”

Additionally, as with any quality TBA, insurance brokers generally have a wide network and are good source of referrals to other nonprofit service and consulting professionals. In describing this role, Mike Kelly says:

“As a broker, I’m an intermediary by nature. I need to know the best-in-class service providers. My job is to introduce nonprofit organizations to insurers, so why wouldn’t I do that for other service providers as well? If you need a best-in-class service provider, we either know them or know how to find them."

This important role should not be overlooked, as referrals from trusted sources tend to be more reliable than advertisements and internet searches.

Planning Tip – Nonprofit organizations are constantly changing and evolving. Similarly, the risk landscape is always shifting based on the evolution of the organization or external factors. Thus, organizations should avoid long stretches of renewing their existing insurance policies without doing a comprehensive assessment, evaluation, and review. This should be done every 2-3 years at a minimum, and perhaps more frequently when new operational changes occur or during periods of rapid change in the insurance market.

Insurance brokers are an under-utilized resource for many nonprofits. Do not wait until your annual policy renewal to reach out to your insurance broker, as your broker may have valuable perspectives on a wide range of different risk management and operational issues that could benefit your organization.