Golden Gate Bridge at sunset in San Francisco, California, USA

Filing a Claim: The Moment of Truth in Broker-Client Relationships

Apr 1, 2024

When a loss occurs is when you find out how good your insurance policies really are. And how much the broker who sold them to you is actually worth.

It’s also when clients must ask: Is my broker simply going to hand my claim off to the insurer and step back? Or will they actively advocate for my interests and make sure the claim is favorably resolved?

They’ve already turned the page.

Sadly, the answers are likely to be disappointing. In most cases, agents and brokers will take the path of least resistance. They might help their clients report the claim and maybe follow up with adjustors for updates, but that’s about it. From their perspective, claims are seen as an inconvenient and time-consuming function of the client relationship, one that interferes with their larger goal: selling new policies and making more commission.

The prevalence of this attitude was demonstrated recently, when one of our colleagues called an adjustor at a major insurer to press him on a coverage issue. After she made the case as to why the loss should be paid, the adjuster asked her, “Why are you calling me? We don’t generally hear from agents and brokers. We usually just work directly with the client.”

Why should that be? Why don’t agents and brokers assume the role of advocate instead of simply playing traffic cop between clients and insurers?
The answer lies in the way most agents and brokers are paid.

The commission conundrum.

Because most agents and brokers collect a commission that is a percentage of the client’s insurance premium, they get their money up front—when the coverage is placed or renewed. Once they get through one transaction, they move onto the next. With commissions already banked, existing clients easily fall off their radar screens. Spending time actually serving a client beyond the renewal transaction keeps traditional agents and brokers from doing what they most want and need to do: find new clients and generate more commissions.

This system of commission-based compensation is one big reason why the traditional insurance model is broken, with clients’ interests and those of their agent/brokers so completely misaligned.

What you have a right to expect.

Clients want coverage, of course, but they also need a full array of risk management services, especially help in navigating the often-challenging claims process, and advocacy at the moment that matters. The best agents and brokers recognize that, to properly serve their clients’ best interests, they must go well beyond the role of salesperson or traffic cop. To stand by their clients every step of the way, making sure to use their experience, expertise, and leverage to keep things on track, communicate clearly, manage expectations, and ultimately get clients what they deserve.

To go even further, best-in-class brokers like Altus Partners help clients understand what to expect when they suffer a loss BEFORE a loss occurs. Explaining the reporting provisions and other mechanics specific to a client’s various policies when those policies renew goes a long way in helping minimize the chance of there being any surprises or missteps after an unexpected and unsettling loss, when emotions can be charged, and clients may not be thinking clearly.

Traditional insurance agents and brokers have spent decades trying to frame themselves as “trusted advisors.” But until commission is removed from all insurance transactions—as Altus Partners has done for corporations since its inception—there will always be a potential conflict of interest in their relationship with clients, and they will effectively remain nothing more than salespeople who aren’t financially motivated to provide the level of service and advocacy that their clients want, need, and deserve.