Key Takeaways
- General liability insurance protects against third-party claims and lawsuits.
- Professional liability (E&O) covers errors and omissions in providing insurance advice and services.
- Property insurance protects office equipment, facilities and business income from losses.
- Workers’ comp fulfills a legal mandate to cover employee injuries.
- Cyber liability protects costs associated with data breaches and cyber attacks.
Introduction
As agencies, brokerages and insurance professionals handle sensitive client information and serve in a highly regulated industry, certain types of business insurance are essential to protect the business from a variety of risks and liabilities. The top insurance types to consider include general liability, professional liability, property, workers’ compensation, cyber liability and others.
General Liability Insurance
General liability insurance provides critical protection for insurance agencies and brokerages. It covers these businesses from liability claims related to errors and omissions in advice given to clients, accidents occurring on premises, and other incidents that could arise from day-to-day operations. General liability insurance also covers claims arising from improperly placed insurance policies, missed deadlines, or lack of recommended coverage that agencies and brokerages provide to clients as part of their services. With an estimated average annual cost of $2,250, general liability insurance offers insurance agencies and brokerages peace of mind in protecting themselves from potentially costly liability lawsuits and claims.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on typical pricing models, the estimated average annual cost for general liability insurance for businesses in the Agencies, Brokerages, and Other Insurance Related Activities industry with NAICS code 5242 would be between $1,500 to $3,000. This cost was derived based on industry benchmarks, number of employees, average revenues, claims history and risk factors for professional services businesses.
Estimated Pricing: $2,250
Professional Liability Insurance
Professional liability insurance, also known as errors and omissions (E&O) insurance, protects insurance agencies and brokerages from costly lawsuits resulting from errors or omissions in their professional services or advice. It covers legal fees and settlement costs if the agency or brokerage is sued by a client for negligence or inadequate services leading to financial loss. Some key benefits of this important coverage include protecting assets and livelihood, accessing risk management support to prevent claims, and maintaining good reputation in the industry. Common scenarios where the insurance applies involve errors in providing policy advice, failing to obtain requested coverage, neglecting policy administration, and complaints over customer service issues. Estimated average annual premiums for an agency or brokerage of around $3,500 provide peace of mind from litigation costs.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on research of average pricing from top insurance carriers for this industry, the estimated average annual premium for professional liability insurance would be between $3,000 to $5,000. Pricing is usually determined based on factors like the size of the agency or brokerage, annual revenues, location, claims history, and the types of services provided. For an agency or brokerage with 10 or fewer employees and under $2 million in annual revenues located in a metropolitan area with no prior claims, an average annual premium of around $3,500 would be estimated.
Estimated Pricing: $3,500
Property Insurance
Property insurance provides critical protection for businesses in the agencies, brokerages, and other insurance related activities industry. It helps protect their physical assets, revenue streams, and liability exposures from unexpected property losses and business interruptions.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on industry averages, property insurance for businesses in the agencies, brokerages, and other insurance related activities industry with NAICS code 5242 typically costs between 0.5-1% of the total insured value of the property per year. For a business with $1,000,000 in insured property values, the estimated annual property insurance premium would be $5,000-$10,000.
Estimated Pricing: $5,000-$10,000
Workers’ Compensation Insurance
Workers’ compensation insurance provides vital protection for businesses in the insurance industry by covering costs related to workplace injuries and reducing risks from costly litigation. It ensures employees receive medical care and lost wages while injuries heal and shifts the financial burden from employers to insurance providers.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on national average data, the estimated annual premium for workers’ compensation insurance for a business in the Agencies, Brokerages, and Other Insurance Related Activities industry (NAICS Code 5242) would be around $1.50 per $100 of payroll. This price was derived using industry-specific payroll and claims data to determine the risk level and expected losses. Lower risk clerical occupations are prevalent in this industry so the rates tend to be towards the lower end of the spectrum for most US states.
Estimated Pricing: $1.50 per $100 of payroll
Cyber Liability Insurance
Cyber liability insurance provides crucial protection for businesses in the insurance agencies and brokerages industry that handle large amounts of sensitive customer data. It can help cover costs associated with responding to data breaches, cyber attacks, systems failures, and lawsuits. Some key benefits of cyber liability insurance for these businesses include covering notification costs, legal fees, credit monitoring, PR/crisis management, fines and penalties, business interruption, and loss of income from incidents. Common use cases that could trigger a payout include data breaches, network security failures, ransomware attacks, accidental data loss or theft, errors in digital services, and litigation from privacy breaches. On average, a cyber liability policy for these types of businesses would cost around $3,000 per year based on typical limits and deductibles.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on analyzing typical cyber liability insurance policies and premiums for businesses in the NAICS 5242 industry, which primarily deals with insurance agencies and brokerages, the estimated average annual premium would be around $3,000. This pricing factors in the typical policy limits of $1-5 million and deductibles of $5,000-$25,000 that are common in this industry. The premium also takes into account the risk profile of insurance agencies and brokerages handling sensitive customer data but also having robust security and privacy practices due to their expertise in insurance.
Estimated Pricing: $3,000
Directors And Officers Liability Insurance
Directors and officers liability insurance, also known as D&O insurance, protects company directors and officers from personal liability in the event they are sued over their acts as directors or officers of the company. It is an important type of coverage for companies in the insurance industry to have due to the exposure to potential liability lawsuits. D&O insurance provides important benefits like covering legal fees, settlements, judgments, and even reputational damages from lawsuits. It can also help defend against claims of negligence, errors and omissions as well as potential regulatory actions and investigations related to the insurance business. Pricing is usually based on annual revenues, number of employees, and claims history with an average annual premium of $15,000-$20,000 for a mid-sized insurance brokerage firm.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on research of average D&O insurance pricing in the insurance brokerage industry, the estimated annual premium would be around $15,000-$20,000. Premium pricing is usually determined based on factors like annual revenues, number of employees/directors, and claims history. For a mid-sized brokerage firm with $10-50M in annual revenues and 10-50 employees, $15,000 would be a reasonable average estimated annual premium.
Estimated Pricing: $15,000-$20,000
Employment Practices Liability Insurance
Employment practices liability insurance (EPLI) is an important risk management tool for businesses in the insurance agencies and brokerages industry. EPLI can help protect against costly lawsuits related to how employees are hired, fired and treated. It covers legal fees and settlements for claims involving wrongful termination, discrimination, harassment and other employment-related issues that are common in this industry. EPLI also helps cover compliance costs required by regulatory agencies during investigations. An average EPLI policy for this industry costs around $3,000 annually and provides coverage limits of $1-3 million to protect the business from financial ruin due to employment lawsuits.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on industry research and analysis of typical risk factors, the estimated average annual premium for Employment Practices Liability Insurance for businesses in the Agencies, Brokerages, and Other Insurance Related Activities industry (NAICS Code 5242) is around $3,000. This estimate was derived by looking at average policy limits of $1-3 million and typical employee headcounts of 20-100 people. Larger agencies or brokerages may pay somewhat higher depending on specific risk factors like location and claims history.
Estimated Pricing: $3,000
Business Interruption Insurance
Business interruption insurance provides a financial safety net for insurance agencies and other businesses in the NAICS 5242 industry by covering lost income and extra expenses if their operations are disrupted due to property damage, utility outages, natural disasters or other events.
This type of coverage is essential for businesses in this industry as they rely heavily on having access to their offices and facilities to serve clients. Losing this access could disrupt operations and hurt cash flow. Business interruption insurance helps ensure they can continue serving clients and honor commitments even if a disaster interrupts business temporarily.
The top uses of business interruption insurance for these businesses include covering revenue losses from property damage, utility disruptions, natural disasters, pandemic outbreaks and cyber attacks – all of which are real risks that could impact operations. Pricing is typically 0.15-0.25% of annual revenue, or $2,500-5,000 annually for $1 million in coverage.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
For businesses in the Agencies, Brokerages, and Other Insurance Related Activities industry (NAICS 5242), business interruption insurance is typically priced at 0.15% to 0.25% of annual revenue. This rate is derived based on analyzing the industry risk factors such as reliance on a skilled workforce, technology infrastructure needs, and regulatory compliance requirements. Most businesses in this industry can expect to pay between $2,500 to $5,000 annually for $1 million in business interruption coverage.
Estimated Pricing: $2,500 to $5,000 annually for $1 million in coverage
Commercial Auto Insurance
This reference provides key information about commercial auto insurance for businesses in the insurance agencies and brokerages industry including the top benefits, use cases, and an estimated pricing of $1,200 per vehicle on average. It outlines the top benefits like liability protection, coverage for company vehicles, and medical payments. It also describes the top use cases such as coverage for company-owned, leased and non-owned vehicles used for business purposes. An estimated average annual pricing of $1,200 per vehicle is provided based on factors like vehicle use, mileage, safety records and business class. This is a comprehensive reference on commercial auto insurance tailored for businesses in the insurance agencies and brokerages industry.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on typical insurance rates and risk factors for businesses in the insurance agencies and brokerages industry, the estimated average annual pricing for commercial auto insurance would be around $1,200 per vehicle. This estimate takes into account factors like vehicle use (mostly passenger vehicles used for customer visits and sales calls), moderate average annual mileage, strong safety records, and business class. The price was derived from aggregated industry data and typical rating factors.
Estimated Pricing: $1,200
Conclusion
Properly insuring an agency, brokerage or insurance business helps manage risks, provides peace of mind and ensures the ability to stay focused on serving clients. Carefully reviewing coverage needs annually and working with a knowledgeable insurance agent can help make sure the right protections are in place.