Wholesale Market Not A Dumping Ground BocaRaton, Fla.

While wholesale brokers and managing general agents are workinghard to fill the needs of their independent agent clients and toretain good relations with their longtime producers, there are someretailer practices that draw the ire of wholesalers.

“We want to get our message out there that we are a truly viablemarket and not a dumping ground for independent agents,” saidRonnie C. Moore, president of the American Association of ManagingGeneral Agents. “If they are not careful, they will not have amarket to go to.”

His comments were among the observations made by MGAs regardingthe relationship between wholesalers and retail agents during the77^th annual meeting of the King of Prussia, Pa.-basedAAMGA held late last month.

Mr. Moore, who is also president of The Southern General AgencyInc. in Bowling Green, Ky., emphasized that what is driving therelationship between carriers and agents now is not market share,but underwriting profitability.

In light of this reality with carriers, he said, what the MGA islooking for from independent agents is a willingness to maintain along-term relationship. MGAs want to do business with retailersthat are serious about doing continued business, instead of justlooking to place some business to fix immediate problems they arehaving, he said.

Joe Hutelmyer, president-elect of AAMGA and president ofBurlington, N.C.-based Seaboard Underwriters Inc., said MGAs seekquality business that proves profitable for everyone.

“Most independent retail agents who are in our industry havebeen in it for eight to ten years,” observed Mr. Hutelmyer. “Theyhave not seen a market like this before, and many of them do notknow us or our marketplace.” Their initial response is to take whatisnt wanted in the regular market and to place it into the MGAmarket, Mr. Hutelmyer said.

In an educational seminar held during the conference, titled“Truth and Consequences of the Wholesale Market,” MGAs discussedsome of the things that retail agents do to undermine the wholesalerelationship.

Jerry Hargrove, president and chief executive officer ofFairgreen Capital, L.P., DBA Northside Insurance in Alpharetta,Ga., led the discussion, observing that the relationship betweenthe wholesale and retail agents should be a “winwin situation” foreveryone involved. In this relationship, trust and education areinvaluable, said Mr. Hargrove, who is also a former president ofthe National Association of Professional Insurance Agents.

“If I cant trust you, I cant afford to do business with you,”especially with todays market and legal system, he said. “I cantafford to take that chance.”

“We are not something scary or mysterious,” said Mr. Hutelmyer,at a separate press conference, stressing the need to build betterrelationships. “We are business people. We operate our agencieslike [carriers]. If they [retail agents] would look at us as theydo insurance companies, instead of some strange two-headedmonsters, we would all be more successful.”

During the educational seminar with Mr. Hargrove, wholesalersand MGAs said that retailers make the relationship difficult bysubmitting incomplete applications and information that is eitherincomplete, not updated or illegible.

One question every retail agent should be prepared to answer,said the participating MGAs, is why the agent is bringing the riskto the wholesale market. If it is because it is a bad risk or anon-renewal, they say, the agent should be honest about itinitially so the wholesaler knows how to approach the risk or if heor she can help.

Agents must also be prepared to give MGAs a reasonable amount oflead time on a risk, as much as two weeks, at least.

MGAs said it really irks them when agents use them as quotingtools, in some cases, for the sole purpose of making the priceincreases given by the admitted carriers look better.

“Its just a bad waste of time,” said one MGA.

Mr. Hargrove suggested that from the retailers point of view,MGAs could also do some things to make the relationship better.These included clearly identifying the person a fax is going to,because retail agencies have a lot of clients sending paperwork toa lot of different people within an agency.

He also suggested that when information is missing, identifywhat that information is and tell the agent what the deadline isfor getting it back to the MGA.

Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, June 2, 2003.Copyright 2003 by The National Underwriter Company in the serialpublication. All rights reserved. Copyright in this article as anindependent work may be held by the author.