Chapter 2: Retailers: Establishing the Relationship with a Wholesaler

Making Full Use of the Wholesale Market

It has been the custom of Retail agents to consider the Wholesale Market solely as a source for non-admitted markets, excess and surplus lines and special risks. To continue viewing the current Wholesale Market in the same somewhat restricted fashion is inappropriate. While the existing market continues to provide traditional facilities, it also offers standard markets and innovative specialty lines that meet existing needs, i.e., Kidnap and Ransom insurance, Expense of Hostile Takeover protection, Financial Guaranty, and Vendors Special Interest coverage’s. Changing market requirements have created new sources to meet the needs of the insurance buyer.

Retailers who are not aware of the expansion of the Wholesale Markets are restricting their marketing potential. The extended resources and capacities offered through the Wholesale Markets provide an exceptional competitive opportunity to the Retailer. In order to realize the total possibilities of the Wholesale Market, it is recommended that the Retailer arrange for a preliminary discussion with the Wholesaler whom they have selected. This meeting will accomplish a recognition of the needs and procedures of both entities as well as the identification of the additional marketing facilities which could become available to the Retailer. The Wholesaler can also recommend other market sources which may be required to satisfy the Retailer’s needs. Through an open exchange between Wholesaler and Retailer, the full potential of an affiliation can be more completely understood.

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.

What the retailer should expect from the wholesaler

  1. Financially sound insurers
  2. Stable market sources
  3. Access to a wide range of markets
  4. Prompt payment of return premiums
  5. Efficient handling of claims
  6. Suggestions to make a declined risk acceptable
  7. Protection from double brokerage
  8. Samples of policy forms and provisions

Marketing Issues

The Retailer must be aware of a number of marketing issues that occur when placing insurance in the Wholesale Market. These include:

  • Restricted market availability
  • Finding Wholesale Markets
  • How to use Wholesale Markets
  • Qualifying the Wholesaler
  • Authority of the Wholesaler
  • Access to the Wholesale Insurer

The following checklist should be used in selecting the Wholesaler:

  1. Is there an agency contract or producer agreement?
  2. What are the stipulations of the agency contract or producer agreement?
  3. How long has the Wholesaler been in business?
  4. Is the Wholesale agency owned by an insurance company, investment company or individuals?
  5. What is the professional experience of the principals in the Wholesale Agency?
  6. Does the Wholesaler maintain active membership in a trade association or professional organization, i.e., AAMGA, NAPSLO, IIAA, PIA, CIC, CPCU or any state Surplus Lines Association?
  7. Does the Wholesaler have the professional designation, Certified Managing General Agency (CMGA) or the Certified Insurance Wholesaler (CIW) which details a commitment to continuing education?
  8. What are the areas of specialization of the Wholesale agency?
  9. Does the Wholesaler offer primarily commercial or personal lines markets?
  10. What companies does the Wholesaler represent?
  11. What is the volume and growth of the Wholesaler?
  12. Does the Wholesaler verify the financial solvency of the carriers represented?
  13. Does the Wholesaler maintain adequate Errors and Omissions coverage?
  14. What services does the Wholesaler provide to the Retailer?
  15. What payment terms are offered by the Wholesaler?
  16. Are there minimum annual production requirements?

General Agency Interview Form (PDF)

Guidelines for Working with the Wholesaler



  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. 9. Provide evidence of rejection from the primary marketplace.


  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.