Insurance Broker vs. Insurance Company: What’s the Difference?

Insurance companies assume the financial risk associated with potential claims and use the collected premiums to pay out claims when they occur. They also determine coverage terms, set premium rates, and manage claims. 

An insurance company assesses a small business owner’s or self-employed professional’s risk level when considering their coverage application.

For instance, when you fill out a business insurance application with Zensurance, you are asked where your business is located, what products and services you offer, and what your company’s annual revenue is.

You’ll also be asked how many years of experience you have, how many employees you have (if any), if you use vehicles for business or not, and how many previous insurance claims you may have filed. Insurance companies want to know these details to determine what annual premium (a.k.a. the price of a policy) to charge.

What Is an Insurance Broker?

An insurance broker is licensed to sell insurance policies to people. They act as an intermediary between business owners and insurance companies. Most, but not all, insurance brokers work at a brokerage, an independent firm with many brokers. 

For example, Zensurance is a business or commercial insurance brokerage employing several licensed brokers. Our brokers are trained and licensed by self-regulating industry bodies in each province we serve. For instance, in Ontario, our brokers are licensed by the Registered Insurance Brokers of Ontario (RIBO).

Although brokers sell insurance, they don’t work for one insurance company as an agent does. Instead, they work for you to find the most suitable policy that meets your specific needs. Brokers don’t underwrite insurance policies. Instead, they access a wide range of insurance products offered by various insurance providers and customize them to suit your needs.

Brokers also analyze the insurance market, advise on coverage options, compare policies and prices, and assist clients in obtaining insurance.

Who Sets the Cost of a Business Insurance Policy?

Insurance providers determine the price of an insurance policy, not the broker. However, not all insurers charge the same amount. The cost can vary significantly between different insurers.

Even if you haven’t filed any claims, premiums may fluctuate year-over-year depending on a variety of factors, including:

• The state of the economy
• The total cost of claims an insurer paid out the previous year and how much it expects to pay in claims in the year ahead
• The cost of insurance fraud
• The commissions paid to brokers
• The insurance company’s operating expenses
• The insurance company’s profit margin (like any business, if an insurer isn’t profitable, it won’t be in business for long)
• The cost of reinsurance (even insurance companies buy insurance to ensure they remain solvent in case of a catastrophic loss)

7 Reasons Why You Should Partner With an Insurance Broker

There are seven primary reasons why you should consider partnering with a broker to help you fulfill your insurance needs:

1. Knowledge and Guidance

An insurance broker works for you, not an insurance provider. That means they partner with small business owners as their trusted advisors. They give expert advice, help define and explain the details of an insurance policy and recommend coverages and coverage limits.

Although you have the final say on what insurance to buy, your broker can help you make informed decisions and will customize the policy to suit your unique business needs.

2. Customized Insurance Policies

Brokers work to understand your unique insurance requirements and tailor your policy to meet your needs. They can help you find policies that provide the right coverage for your risks, ensuring you’re neither underinsured nor overinsured.

3. Claims Handling

Why do we buy insurance? If something goes wrong, you suffer losses, damages or are sued. That’s when you file a claim for financial support to help cover those costs. 

While your insurance provider decides whether to pay out the claims it receives or not, your broker ensures your claim is managed quickly and efficiently and serves as an advocate on your behalf with the insurance provider. They help navigate the claims process and work to ensure a fair and timely resolution. If your provider rejects your claim and you wish to dispute its decision, your broker can speak to the insurer directly and have them review the claim and reconsider the original decision.

3. More Choice

When you partner with a broker, that broker will shop around on your behalf, comparing coverage options and prices to find policies that offer the best value.

The more insurance company partners a broker has in their network, the more options for you (and Zensurance has more than 50 Canadian insurance providers in its network).

4. Saves You Time and Effort

Searching for and comparing insurance policies can be time-consuming and complex. A broker does the work for you, saving you time and effort by presenting you with researched options that align with your business’s needs.

5. Saves You Money

Contrary to the misconception that using a broker is more expensive, brokers have relationships with insurance providers that allow them to negotiate a competitive premium on your behalf. 

Zensurance’s technology helps us keep costs low, and we pass the savings on to you. And because we sell policies to hundreds of thousands of Canadian small businesses and self-employed professionals annually, our insurance provider partners often give us preferred rates.

6. Ongoing Customer Service

Your company’s insurance needs change over time. A broker provides ongoing support and service, helping you review and adjust your coverage as necessary to ensure it remains up-to-date and relevant.

7. Licensing and Regulation

All Zensurance brokers are licensed through RIBO and other provincial regulatory bodies. The licensing requirements are strict, and the training and certification brokers must complete is not a walk in the park. 

In other words, when you partner with a Zensurance broker, you’re dealing with a highly trained professional accredited in the provinces where they sell insurance. They are accountable for their actions through the provincial regulatory bodies.

Why Choosing an Insurance Broker Is Your Best Option

Choosing a business insurance broker gives you the customer service and care you deserve. You want to protect your business and finances, but you also need it to be affordable.

Brokers strive to act in your best interest and provide personalized, honest service by offering unbiased recommendations. They specialize in serving your industry and understand all the nuances and terminologies in insurance policies. And since they’re not beholden to any one insurance company, they can provide you with multiple options at various prices to help you get the customized policy you require.

Fill out an online application for a free, non-obligatory quote from Zensurance. Let our broker team prove we can protect you and your assets while saving you money on your insurance bill.