Covenant Risk Advisors, Inc.

Insurance Risk Advisory Services

Frequently Asked Questions


Question: I already have an insurance broker or agent, why do I need an independent risk management consultant?


Brokers and agents first priority is selling insurance since they typically rely on sales commissions for payment. Relying on your broker or agent to provide risk management advice creates a conflict of interest since buying more insurance is not always the most beneficial risk management solution.


Question: My broker is paid a flat fee for their services, why do I need an independent risk management consultant?


In addition to client compensation, most brokers and agents rely on insurer paid sales commissions, called “contingent commissions.” Insurer contingent commissions provide incentives for brokers and agents to place insurance with their company and reward brokers and agents by paying them bonus commissions that are contingent on the volume of premium written. Insurer paid contingent commissions encourage brokers and agents to sell more insurance for their company and typically pay higher bonus commission percentages as total premium volumes increase.


Although most brokers and agents receive contingent commissions, there are some that do not, however even these brokers and agents still have an incentive to sell more insurance. Insurance companies are selective about which brokers or agents sell their products and insurers must be careful not to dilute a given geographic area with too many broker or agent representatives.


As a result, insurers require a company appointment to sell their insurance products within a given area. Insurer appointments are often determined by broker sales volume. Brokers’ and agents’ know that they must have insurer appointments to service their clients, and the more appointments they have, the better their chances are of winning new business and keeping clients.


More insurer options results in greater pricing competitiveness, access to specialized insurance programs for niche clients, alternatives in the event of insurer insolvency or changes in insurer risk appetite, and many other related advantages for the broker or agent.


Bottom line, brokers and agents are always incentivized to sell more insurance, regardless of whether they are compensated by fee or any other compensation arrangement.


Question: When should I retain the assistance of an independent risk management consultant?


Nearly every risk management challenge warrants the objective perspective of an independent consultant and we offer customized service offerings suitable for virtually any type of engagement.


Special projects such as Risk Management Program Audits, Request for Proposal (RFP) Services, Brokerage Service Evaluations and the like, which are point in time services, can be contracted on an as needed basis.


Other services that require ongoing interaction such as Risk Management Administration or Insurance Program Renewal Services are best accomplished when our consultants become an integral part of your organization’s continued risk management processes.


Regardless of the situation, our professionals will help you design a cost effective strategy to maximize efficiency and results – our primary focus is bringing value to your organization.

Question: What types of organizations typically use your services?


Our professionals have experience with a diverse client mix and have served clients of various sizes within the following industries:

  • Aviation
  • Financial Services
  • Communications
  • Construction
  • Education
  • Energy/Utility
  • Healthcare
  • Hospitality/Hotel/Resort
  • Manufacturing
  • Non-Profit
  • Public Sector
  • Real Estate
  • Religious Sector
  • Restaurant/Food Service
  • Retail
  • Technology
  • Private Client/High Net Worth


Although varied in terms of industry sector, our clients typically have one or more of the following traits in common:

  • They recognize the value in having a truly objective third-party risk management advisor
  • They appreciate the complexities of an effective risk management program and value expert counsel
  • They are held highly accountable for the management of insurance coverage and costs
  • They lack experience or expertise in risk management
  • They lack time to devote to the risk management function
  • They prefer to shift the responsibility for risk management to a third-party contractor
  • They wish to increase accountability for their other risk management service providers (brokers, TPAs, etc.)


Question: How do you charge for your services?


Depending on the scope of the engagement we offer flat fee, fee and expense, or time and expense billing.


Typical client engagements for ongoing advisory support services are billed on a monthly basis along with supporting documentation of time and expenses subject to an annual pre-approved maximum.


Other clients prefer to negotiate an annual flat fee for service, or a fee for service plus expenses arrangement billed in negotiated installments. Many of our clients require detailed billing allocations for internal departmental reconciliations or expense matching for accounting purposes – we are well versed in providing these services.