The Insurance Bid Process-Reader Comment

Here is a question from a reader. I thought it might be of interest to others.


I receive your emailed newsletter regularly and find it very helpful. I noticed that on 5/6 you commented in “What the Best Do” that “4) They bid their insurance using multiple insurers and brokers every three years to assure the best coverage, service, and price.”

I am in the midst of evaluating whether to switch brokers. My current broker runs a local agency and has provided very good service over the past 5-6 years such that we migrated all of our policies to him, even employee health plans. He has done well. However, we have grown significantly and, as a nonprofit, have been enticed by a larger broker from the Boston area who has a significant segment of clients in the nonprofit area and related expertise, plus a few other in-house services (primarily in risk management and access to specialty markets) that our local broker does not offer.

In evaluating this, both guys told me that they cannot really compete with one another in quoting as typically the broker of record is the one who gets best access to carrier quotes, particularly when there are a limited number of carriers in a market as is frequently the case in Massachusetts. The conclusion to this conversation seemed to be that shopping for a broker was a separate activity from shopping for quotes. Can you enlighten me more?

I appreciate your input.

Name Withheld, Massachusetts


Here is my reply:

The competitive bid process results in the best coverage at the best price – when it is done correctly. As you point out, the broker selection process as part of the bid process is the toughest part of the equation. Get that wrong and the results are less than the best.

Garbage in, garbage out.

That said, you have to look at the needs of your organization and determine what is the best overall approach. To bid or not to bid. To stay where you are or to move the account based on bid or just broker selection.

Realize also that brokers would rather not compete on a bid basis – too much to lose with a great deal of effort.

Attached is a booklet I wrote that reviews the process. Others tell me it is helpful. Let me know what you think.

Of course, you get the best result when you bring in an expert .

Let me know if this has helped or just confused you more.


Blog Readers,

If you’d like a copy of my bid booklet send me an email. The electronic version is free. Copies in booklet form are available on my website for $12.00