In a perfect world, a retail agent would be able to place all of his business in the admitted marketplace. In an almost perfect world, if the admitted market were unwilling to write a policy, then the agent would be able to approach one E&S broker (wholesaler) and get the job done. In the real world, it is a bit more complicated.
E&S is a critical part of the insurance industry, particularly in coastal areas like Florida. E&S provides options when the admitted marketplace withdraws from a particular class or line of business. It is the safety valve that offers critical coverages to businesses and consumers even in challenging times. We have seen this quite dramatically over the years, particularly in the property business.
While the E&S marketplace may be complex, working with a broker does not have to be. The key to building a successful agent-broker relationship can be boiled down to a few time-tested strategies.
Some agents think "the more the merrier" when trying to place business with brokers. Wrong. One of the worst things a retail agent can do is to use a shotgun approach in working with brokers. Sending a submission to nine or ten — or more — brokers does a disservice to the retailer, the wholesaler, the markets, and the insured. When the underwriter sees the same submission come in from multiple wholesalers, he knows the account is being shopped all over the place. He also knows that the probability of writing the account is remote, so if he offers terms at all, it may not be his best effort.
Imagine three to four retail agents working on an account. They each send the submission to all of their admitted markets as well as the E&S marketplace. If each retailer sends the submission to four or five wholesalers, it ends up being presented to 12-20 different wholesalers. If each wholesaler approaches four or five markets (or more)…well, you get the picture. This is not a great way to build a relationship.
Profitable Partnerships
Everyone is better served when the retail agent establishes solid working relationships with a few select wholesalers who can give him access to the majority of the E&S marketplace. When an agent has a particularly problematic risk, he can contact the first wholesaler and ask which markets he will be approaching. Then he can contact a second wholesaler, advise him what markets already have been approached, and see if he has alternative markets. He can even reach out to a third wholesaler, if necessary, telling him what markets the other two wholesalers have approached, and ask if there are alternatives. This way, everyone is on the same page and the agent has a better opportunity for success.
As with most successful endeavors, paying close attention to details in the beginning pays off in the end. Retail agents need to provide wholesalers with complete submissions and have a good hit ratio. Complete submissions generally include basic information such as an ACORD application, required supplemental applications, hard-copy loss information, and a narrative description of the insured's operations. A web site address and financial information are also useful. Agents can be sure they will not get the best deal if they provide an incomplete ACORD application with a note attached that simply says, "Please quote." Providing as much information as possible helps the E&S broker provide the best quote.
Service and market access is the name of the game in the insurance business, especially in E&S lines where many wholesalers have the same markets. One way a wholesaler distinguishes himself is by providing excellent service. However, service expectations are very subjective. If the wholesaler thinks that 24-hour turnaround is acceptable, and the retailer feels he should have a response in an hour, there is a problem. The retailer and wholesaler must have excellent communication to make sure that the needs of both are being met.
Go to the Experts
In a perfect world, the retail agent would know everything and know how to get everything done. In the real world, a retail agent's job is not necessarily to know all the answers, but rather to know where to go to find the answers. There are many very smart and creative underwriters and brokers in the E&S business. Some are generalists who can help or give guidance on a wide variety of topics. Others are specialists who have the expertise to help the retail agent in writing additional business.
E&S wholesalers are an extension of the marketing arm of retail agents. They can provide valuable information on what markets and products are available for difficult-to-place risks or unusual coverages. They can offer options that present the best terms, conditions and pricing. They can locate alternatives in the E&S marketplace that will provide the insured with broader coverage for a little more money — or even a little less.
They have the markets and capacity to help retail agents build their books of business and provide appropriate coverages to their clients.
The insured comes to the retail agent for his expertise. The agent should approach the E&S broker in much the same way. By forming strong partnerships with the right E&S brokers, everyone wins.
Michael Franzese, CPCU, CIC, CRM, ASLI, CPA is a vice president/branch manager of Burns & Wilcox in Tampa. He may be reached at 813-558-9560 ext. 2206, or mjfranzese@burns-wilcox.com.
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