What Is an Insurance Broker and How Many Do You Need?

Because of this role switching, make sure you ask a couple of key questions when shopping for a broker. Ask them how many different carriers they represent in a given market, such as health care.

If it's only a few, that could mean they are acting more like an agent. Ask brokers how they are compensated and if they have any special commission deals with the carriers they are recommending. Also, make sure brokers aren't charging any special over and above the cost of the coverage.

Beware of brokers who continually switch your insurance to new carriers. Brokers generally earn higher commissions when they bring new business to an insurance carrier. Unless the savings are significant or you've been dropped due to your claim history, it's not advisable to switch carriers haphazardly.

How many of these brokers do you need? In general, you are going to need two brokers. One that specializes in property and casualty, particularly worker's compensation, and the other who understands all the ins-and-outs of employee benefits, especially health care. In addition, depending on your business, you might need a broker that specializes in another field, such as professional liability.