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Customers never shop the broker's price
How brokers get paid
For small and mid-sized businesses, a broker's revenue is a commission on the premium. When premiums rise, the broker's revenue rises with them, with no price to renegotiate and no raise to ask a client for. Fortune 500 companies pay a fee instead, and only the very largest corporations are big enough to build an insurance department of their own.
What customers shop
Customers do shop, but they shop the carrier's price. A broker doing the job brings back multiple options and finds the best one, so there is little reason to shop the broker.
Why they leave anyway
Rising-rate markets are where customers leave anyway. When a customer's rate goes up 15%, even a broker who gathered five quotes from the five largest carriers can lose the account, because the customer feels the need to shop it. A new carrier often doesn't offer a better price, but the customer wants to see a change.
Why do big clients pay fees instead of commissions?
A commission is built into the premium, so the client never sees a separate bill for the broker. Large buyers tend to want that compensation visible and negotiated on its own. A fee lets them set the scope of service and price it directly. Many large corporate accounts are placed on negotiated fee agreements.
Why is renewal the moment customers shop?
A price increase lands at renewal with a deadline attached. Quotes from different carriers differ in deductibles, limits, and exclusions, so comparisons are rarely like for like. That gives a customer reasons to ask for more quotes even when the existing broker already gathered several. Most commercial property and casualty policies run for one year, which makes every renewal a decision point.
Why do only the largest companies self-insure?
Insuring your own risk takes enough money to absorb large losses and enough scale to make those losses predictable. Many large corporations form a captive, a subsidiary insurer that covers its parent's risks. Running a captive requires staff, actuaries, and regulatory filings. Bermuda and Vermont are two of the best-known places to domicile captives.
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