When considering who to choose for such an important role as their F&I partner, dealers must ask why they would consider a broker. That is, why consider a broker vs. a single-line agent or a direct employee vertical company?

When a vertical employee is competing with a broker or agent, they like to characterize brokers as middlemen —
or more specifically, unnecessary middlemen. This implies a higher cost and perhaps a less efficient delivery mechanism than direct employees.

But you must ask yourself, which one is more efficient and cost-effective for the insurance companies? Having a bunch of salaries, bonus plans and expense accounts to deliver their products or only compensating a broker on actual production.

Think of how the two enterprises are staffed. Brokers have commission-based people who are rewarded only for what they produce or insurance companies with salaried executives who are “managing” a book of business. If your dealerships offered their employees no base salary, no guarantee, no minimum wage and only paid-for results — that is the arrangement insurance companies have with brokers.

When dealing with a broker, they bring you multiple solutions. Those solutions can be tailored to your specific needs. Alternatively, if a direct employee has one program to offer — then guess what program they are going to say is the best? Additionally, brokers can vary the solutions within your dealer group, tailoring products and coverages based on the needs of your respective franchises and locations. Brokers think nimble, fast-paced, flexible, and solution-oriented. The big box direct guys sell the exact same products with the exact same process regardless of your needs.

But aren’t the big box guys safer to do business with? No, your relationship is direct with the insurance company either way. Administration agreements and reinsurance treaties provide cut-through language — so your agreements are backed by the actual insurance company the broker represents.

As a broker, not only will we customize training and service solutions for you — but we will also perform analysis specifically built around bringing your needs forward.

Additionally, brokers have lower turnover. So their clients can enjoy long periods of uninterrupted service and maintain relationships for years. If a direct field staff has a long-term employee, they’ve historically been the weaklings — doing just enough to scrape by another year. Not a go-getter, but a middle third performer who doesn’t rock the boat.

Brokers receive dramatic pricing discounts from the insurance companies because of the volume they produce and the efficiencies of the arrangement. But also, don’t forget there is a competitive landscape where the insurance companies are competing to offer brokers the best pricing vs. a direct company where internal margins are being managed by executives without competition.