Broker vs. Benchmarking: What’s the Smarter Way to Cut Insurance Costs?
When it comes to controlling insurance costs, most CFOs rely heavily on their brokers. And on paper, that makes sense, brokers manage placements, bring market expertise, and help navigate renewals. But what happens when costs keep climbing and savings are hard to pin down?
That’s where independent insurance benchmarking comes in. It gives finance leaders an unbiased, data-backed view of what similar companies are actually paying, so you can identify gaps, challenge assumptions, and uncover hidden opportunities for savings your broker may not be incentivized to find.
Let’s break down what brokers really do, how benchmarking works, and why smart CFOs are using both to drive better outcomes.
What Do Insurance Brokers Actually Do?
Typical broker compensation models
Brokers are commonly compensated through commissions built into your insurance premiums. That means the more you spend, the more they earn. Some brokers also receive bonus tiers or overrides from carriers, which can further influence how they place your business.
While many brokers work hard for their clients, it’s important to remember that they are ultimately salespeople, not auditors.
Common blind spots in broker-delivered comparisons
Brokers often provide “marketing exercises” at renewal, comparing a few carrier quotes, showing last year’s rates, and highlighting modest savings. What these reviews lack is context. Are your rates high compared to peers? Are your plan designs outdated? Are there hidden fees in your current setup?
These are questions brokers rarely answer in full.
Why brokers focus on placement, not optimization
Brokers are rewarded for placing coverage, not for reworking plan structure, funding models, or administrative overhead. That means real cost optimization is often left off the table, unless someone else is asking for it.
What Is Independent Insurance Benchmarking?
Data-driven comparisons to peer companies
Independent benchmarking takes your actual policy details, rates, deductibles, retention levels, fees, and compares them against market data from companies like yours. This isn’t based on general trends or sales decks, it’s grounded in what similar employers are really paying.
Aligning with the employer’s financial interests
Unlike brokers, independent benchmarking consultants are paid by you, not by a carrier. That alignment matters. Their job is to find inefficiencies, identify overpriced policies or services, and provide leverage for renegotiation.
Why benchmarking often reveals hidden savings
Benchmarking often uncovers fees buried in administration costs, coverage that doesn’t match risk tolerance, or inflated premiums hiding behind “preferred” carrier packages. And when you’re dealing with seven or eight-figure insurance budgets, even a small percentage difference can translate to real savings.
When Benchmarking Outperforms Traditional Broker Reviews
Fee benchmarking without disrupting relationships
Benchmarking isn’t about replacing your broker. It’s about giving you independent visibility into how your plan stacks up, and arming you with data to ask smarter questions. Most brokers will engage more strategically once they know you have third-party insight.
Real examples: when internal reviews miss high costs
We’ve seen companies overpay for property coverage by 18% compared to peer benchmarks, without knowing it. Others discovered they were still paying legacy broker commissions baked into administration fees years after a change in personnel. These aren’t rare cases, they’re typical when there’s no external reference point.
The value of vendor-neutral insights
Because benchmarking is vendor-neutral, it doesn’t come with a sales pitch. You’re getting a clear, honest read on your plan’s efficiency and competitiveness, without pressure to switch carriers or platforms unless there’s a real reason to do so.
How to Combine Broker Relationships with Independent Benchmarking
Keep the relationship, change the leverage
You don’t need to break up with your broker. You just need to rebalance the power dynamic. Independent benchmarking shifts the conversation from, “What do you recommend?” to “Why is this option 12% higher than the peer average?”
Benchmarking as a negotiation tool
When you walk into renewal discussions with fresh data in-hand, you’re no longer negotiating blind. You’re now the informed buyer, and brokers and carriers tend to respond differently when they know you’re asking sharper questions.
Timing it with renewals and audits
The best time to conduct benchmarking is before renewal season, or in tandem with a broader benefits or P&C audit. This ensures your data is current, your leverage is real, and your strategy is proactive, not reactive.
Final Takeaway for CFOs
Brokers are necessary, but not sufficient
Brokers will always play a role in execution. But if they’re your only source of insight, you’re missing the full picture.
Benchmarking reveals what sales-driven reviews miss
Independent benchmarking is a CFO’s best weapon for uncovering inefficiencies, correcting misaligned incentives, and driving true cost savings, without cutting coverage or sacrificing protection.
Want to see how your insurance costs compare?
At PolicySmart, we don’t sell insurance, we fix it. Our independent benchmarking process gives you the leverage to renegotiate smarter and build plans that actually align with your financial goals.
Contact us to get started.