Insurance Consultant: Do You Need One? By Sarah Fjellanger
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hose who serve on the Board of Directors for an association are accountable to all members for decisions that can affect the group. Therefore, a purchase that could produce an invoice anywhere from $10K to $100K or more deserves careful consideration from an outside source. An attorney is used when legal issues arise. An accountant is hired to provide monthly reports of the association’s finances. But when it comes to insurance purchases, the largest line item in the budget, paying for a consultant to review options and explain what is presented in each of them, is seldom considered. Very few board members have detailed insurance knowledge; the type that would allow them to research the options presented and come back to the others with pros and cons. The agents who’ve offered proposals have a financial interest in the product selected and are normally generalists, not specialists in the needs of associations. So who should be trusted? Which product will best fit the needs of the association? Which company has a history of dealing with associations? And what is really being purchased? The decision, when made by the Board, should follow the guidelines of coverage first, then service, and finally cost. If important pieces of coverage are missing, or the company does not provide good service, than who cares what the cost is? Everyone loses. When considering a consultant, the board should first identify what services are needed. One size does not fit all and, although cost should not be the limiting factor, it will need to be taken into account. Know the cost per hour, expect an estimate (verbal is fine) of time needed based on the items selected, and identify a cap on the limit the board is willing to invest.
What should board members expect a consultant to offer?
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Minnesota Communit y Living
Insurance decisions should never be left to chance or guesswork. In the end, it behooves the board to make its choice based on facts that will affect the association at claim time; it is only then that insurance protection matters. Coverage has to be primary in the selection, service by the agent and company are next, and finally, the cost enters in. Wise choices can only be made with full disclosure of all pros and cons for the products offered. Investing in a qualified outside opinion will pay off in the peace of mind that comes from knowing the selection of an insurance carrier was based on the nuances of the association and the best of the coverage options presented.