A Guide to Writing E&S Business - Establishing the Wholesaler/Retailer Working Agreement abd Relationship

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glossary

Chapter 3: Establishing the Wholesaler / Retailer Working Agreement and Relationship

Creation of a functional understanding of the procedural requirements and underwriting authorities of Wholesalers and Retailers is fundamental to the success of a continuing agreement. Professionalism and good faith are essential to a lasting arrangement. If the agreement is to perform effectively, it is important that every effort be made to reach a common understanding regarding what each partner can expect.

  1. WHAT THE RETAILER SHOULD EXPECT FROM THE WHOLESALER
    • Financially sound insurers
    • Stable market sources
    • Access to a wide range of markets
    • Prompt payment of return premiums
    • Efficient handling of claims
    • Suggestions to make a declined risk acceptable
    • Protection from double brokerage
    • Samples of policy forms and provisions
  2. WHAT THE WHOLESALER SHOULD EXPECT FROM THE RETAILER
    • Accurate risk submission information
    • Complete underwriting data
    • Adequate lead time for placement
    • Prompt payment of accounts
    • Follow through on requests for data
    • Timely and complete submission of claims information

A preliminary review of the risk with the Wholesaler, accompanied by a brief outline of the submission, permits the Wholesaler to determine if a market is available. The Wholesaler can, at this point, inform the Retailer whether it already has been approached by another Retailer for placement of the account. The Retailer should also advise the Wholesaler if they have approached other Wholesalers for placement of the account The Wholesaler and Retailer can then determine the best and most equitable way to proceed in marketing the risk to an insurer.  The Wholesaler must know at the beginning of the negotiations which primary coverages are controlled by the Retailer.  The Wholesaler will also need to know the primary limits of the coverage, the premiums, and the terms and conditions of the primary forms before negotiations can be completed on Umbrella or Following Form Excess Liability coverages.
As partners in a productive agreement, it is important for the Retailer to realize that the Wholesaler may not be the underwriter and therefore shares a mutual concern with the Retailer for placement of the risk.  Retailers are encouraged to know the markets and capacities of the Wholesalers with whom they do business.  Wholesalers are counseled to recognize the fact that Excess and Surplus lines are not a regular market for Retailers.

Through shared knowledge of the necessity to operate within the parameters outlined above, the Wholesaler and Retailer can realize benefits not only to one another but to their respective agency clientele.  The agreement between the Wholesaler and Retailer will function at its best when it is considered to be a long-term partnership commitment.

Guidelines for Working with the Wholesaler

DO’S AND DON’T’S

DO

  1. Establish a continuing, working relationship with the Wholesaler.
  2. Make a complete submission, including the completed application signed by the insured, with adequate supporting data.
  3. Determine the application requirements of the Wholesaler PRIOR to submission.
  4. Learn and observe the account payment needs of the Wholesaler.
  5. Make a timely submission. Consider the nature of the risk, know the condition of the market and be aware of the complexity of the risk in order to give the Wholesaler adequate time to provide a market.
  6. Provide a prompt and adequate follow-up to requests for additional information.
  7. In case of a duplicate submission or the replacement of the existing Retailer, submit an Agent of Record letter signed by the insured.
  8. Determine which market the Wholesaler will use to avoid making a duplicate submission.
  9. Provide evidence of rejection from the primary marketplace.

DON’T

  1. Abuse the Wholesale Market by flooding the market with duplicate submissions.
  2. “Tie up” the Wholesale Market.
  3. Submit different sets of data to different Wholesalers, hoping to secure a lower quotation.
  4. Drop the ball once the risk is bound. Be certain to follow through to policy issuance.                               
  5. Advance the premium for the insured.
  6. Sign the application for the insured.

 

 

Next: Company Selection and Marketing Selections

 

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