From the December 2008 issue of American Agent & Broker • Subscribe!

The Last Word: Tapping Wholesalers' Real Values

Just the other day, a retail agent I've known since I entered the business called seeking advice for his customer's property risk. I was able to offer him solutions and connect him with the right market for the specialty coverage he needed.
As I hung up, I started thinking. This kind of long-term relationship based upon mutual trust-the kind that made my customer comfortable enough to pick up the phone-is a big reason the professional wholesale broker is so valuable. Long-term relationships between agents and wholesalers lead to clear expectations and understanding of how we can help find the right markets.
That relationship really matters because often by the time our agent calls us, they already have exhausted routine options and need to meet customers' needs quickly and knowledgeably. The customer wants to know that the person on the other line is going to be the solution provider and operate with integrity.
That's one thing I become passionate about: maintaining relationships and ensuring that agents and brokers know the value of our knowledge and expertise. The education process is constant, as agents and brokers sometimes forget how efficiently wholesalers can find coverage in the right market for almost any need they have.
When Hurricane Katrina hit back in 2005, people who had fled their homes needed coverage for their vacant structures in New Orleans even if they had moved to other states. Most of their agents and brokers didn't think to call us, though, because they normally turn to us for construction, oil, and gas and commercial auto-not vacant property. So we started reaching out to them to remind them of our underwriting capabilities.
In this situation and many others, agents and brokers concur that the No. 1 benefit wholesalers bring to the table is our ability to respond with speed and agility. Other fundamental cornerstones of the wholesale industry include flexibility and creativity with niche products, extensive underwriting experience, maintaining stability in the face of competition and using technology to our advantage.
In a world where change is constant, wholesalers fill needs for market niches with creativity and flexibility. Top wholesalers report receiving a critical mass of business in niche areas, from a new cosmetic surgery procedure to a theatrical production. As a side benefit, niche markets have helped us to develop real-time market knowledge regarding capacity, pricing, risk appetites, market best terms and program design.
Given recent developments in the U.S. financial market and related concerns about the stability of the insurance industry, some agents have asked me how the wholesale market will fare. My answer: History has shown, in hard or soft markets, that wholesalers continue to emerge strong and solvent. Wholesalers find stability by adhering to underwriting discipline and holding expense ratios in check in the face of competition.
In fact, the 2008 "U.S. Surplus Lines-Market Review,obCrLf published by A.M. Best, reported that specialty lines insurers outperformed the property-casualty industry in underwriting and operating performance in 2007. And since 1994, the annual A.M. Best report has found that the solvency record of the specialty insurance industry is good, if not better, than the overall industry.
The most successful agents agree: The real value wholesalers bring to the insurance transaction is knowledge and expertise gained from years of experience working in markets retailers don't work with every day. Wholesalers remain dedicated to cover the higher hazard specialty lines exposures that don't fit the appetite of the standard market. We are in it to solve the customer's problem, no matter the challenge.

John Wood is president of Specialty Risk Assocs., a managing general agency and specialty line insurance broker with offices in Shreveport and Baton Rouge, La.; Ridgeland, Miss.; and Grapevine, Texas. He also is president of NAPSLO, a national trade association representing the specialty lines insurance industry, including surplus lines.

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