Greetings readers, and welcome to a new and recurring feature in Florida Underwriter. I've been blessed with a 30-year career in the insurance industry and I now have the opportunity to share what I've learned with you, as well as join with you as we both learn more about a variety of issues in the Florida marketplace. I hope that as we learn, one of the results is that you save your time and money in the operation of your business. The information in this column will include my perspective, which comes from my experience from underwriting assistant to executive officer of an independently owned wholesale entity. My goal is to share with you some of my varied experiences so we can all better serve our clients.
In addition to my views on issues, this column will also include comments and views from professionals across the state who are familiar with Florida-specific challenges and opportunities. Like you and me, these professionals are dedicated and working hard every day to improve the products and services in our industry, and improving the industry itself. Florida Underwriter does a wonderful job of reporting and providing informed editorials on the personal lines issues faced by our industry. My goal is to focus more on the issues surrounding the commercial lines.
As we look at these areas, the amount of information necessary to function successfully in our business is increasing exponentially. By no means will I assert that this column is going to answer all of the questions each of us have about our business, nor will it be capable of addressing every key issue, but I would like to be able to look at issues that have an impact on your business operations. I would encourage you to contact Michael Adams of the Florida Underwriter, or you may contact me with questions you have about wholesale or insurance company operations, E&S business, professional liability, market news, and its impact on you and so forth.
Navigating Through the Wholesale Market
Since this is the initial column I'll address an issue near and dear to the heart of many of my wholesale brethren. As a retailer you know that wholesalers are falling over one another seeking your business and are consistent with their requests for business, i.e., "just give us a try," or "send us an account to work on." If wholesalers aren't seeking your business, hopefully you know why that is and more importantly you're perfectly content with the situation. For those being courted, the message to the retailer is that there is no minimum volume requirement to trade with the wholesaler. Sounds okay so far, right? Well, the agency's marketing manager or principal or both are frustrated by the fact that while many wholesalers promise service, competitive pricing and the like, they don't always come through when the retailer needs the wholesale operation to deliver.
That makes sense to me as well, since there's probably not much of a relationship in play with an entity the retail agency is working with occasionally, or only on certain risks that may well be few and far between. It's a fairly common story of anyone making agency visits on behalf of a wholesale operation to be handed a "bottom drawer" submission that effectively has been in the market for weeks and just about everyone has had a look at the account. (Did I mention the account is beyond "hard to place"?) That, of course, is a worst-case scenario, but many of the submissions sent to multiple wholesale markets really aren't much better.
You know, but perhaps forget, that wholesalers face the same production pressures and time constraints as do most retailers, so when in doubt, the tendency is to work with the retailers the wholesaler knows. What's that old saying, "better the devil you know than the devil you don't?"
Retail agencies can quickly and easily get into a situation where they have way too many wholesalers on their list (and sometimes too many standard markets as well, but that's a different discussion for a different time). Please note I make a distinction between sending submissions to every wholesaler and sending to those with whom you have a relationship. The former is really a waste of everyone's time, the latter allows you to accomplish a great deal more in the long term.
You've probably read or heard suggestions or written your own guidelines for your agency when conducting business in the E&S market and when selecting wholesalers, but let me share a few of mine with a slightly different spin:
Consolidate. Find where you have three or four wholesalers all going to the same market(s) and start sending business to one or two with whom you are able to develop a relationship. If I'm in your situation, I'm talking with the wholesalers in advance of making the decision and letting them know what your plans are. If they want your business, they'll tell you what they can do for you (with you would be even better) and what they expect from you. Be wary of a market or wholesale entity that promises "everything" but never asks about your business, your needs, or expectations. Hopefully you want long-term partners.
Justify. If someone in your office insists on working with a new wholesale entity, make sure it can be justified in whatever way you define that in your operation. If this entity isn't really bringing you a "new" product or market, why would you simply add them to your already unmanageable list? (Relationship with the individual broker may be a valid reason, but should not be an "automatic approval." You need to ask more questions and consider how this helps you fulfill your long-term goals and objectives. If you are a retailer and need help with the questions you should be asking, or the objectives, call me and mention this article and I'll be happy to discuss it.
Review. Frequently. It's not that hard to do, though it may seem like you can't be bothered and your staff has no time for such nonsense. OK, but isn't that what got you into the situation you're in now – not knowing why or how you have 12 wholesale entities on your books and still not having viable "go to" options that are consistent and effective (read profitable) for your organization?
Consolidate. Yes, it's a never ending process!
If you have this sort of system in place now and you work through it consistently, congratulations. If you aren't being more discriminating in your selection and use of the E&S facilities available to you, I'm certain you're wasting time and money. I encourage you to objectively look at how you can improve this facet of your business. Good business and good luck to you.
To contact Tim Hoelle with your questions, call (727) 456-1529, or thoelle@threefiftysix.net.
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