Selecting a Partner / Service Provider (Part 1)
- Bonnie Boone
- Mar 16
- 5 min read
As a retail broker, engaging with your clients involves multiple components, including developing strategies, setting budgets, selecting insurance carriers, and choosing the right partners. In some cases, collaborating with a wholesaler becomes necessary because certain insurance carriers will only place business through excess and surplus lines brokers. This is often due to regulatory filings, the distinction between admitted and non-admitted markets, and the flexibility of rates in surplus lines.
How to Credential and Select Your Wholesale Partner
Choosing the right wholesaler is a critical decision that can impact on your ability to serve your clients effectively. Here are key factors to consider:
Industry Background
Understand the wholesaler’s experience. Were they previously an underwriter, a retailer, or in another role? Their background influences their expertise and approach.
Responsiveness
A good wholesaler must be quick to respond and proactive in their communication.
Expertise & Value-Add
This is the most essential element, expertise; their knowledge of markets, coverage, and the industry they are representing. If you need to bounce ideas off your wholesaler, they should be able to contribute meaningfully and enhance your strategy.
Exclusive MGU Relationships
Some wholesalers have Managing General Underwriter (MGU) relationships, meaning they hold the pen for specific insurance carriers. This exclusivity can be beneficial.
Size & Distribution Capabilities
The selection of wholesalers may depend on the size of the retail broker. Smaller brokers often rely on wholesalers to access markets where they do not have direct carrier appointments.
Strategic Planning
There should be a clear strategy for which carriers the wholesaler will approach on your behalf.
Technical Expertise Matters
A wholesaler that lacks technical knowledge can be a liability. Choose a partner with strong industry expertise. For example, Captives, my expertise is casualty and healthcare, many of my client’s used captives as a risk transfer vehicle. I had a great conversation with my friend Bill Yurek who retired as President of RPS in Healthcare, the broker on the many large academic medical centers. We talked about the use of facultative reinsurance as opposed to just a syndicated excess program, its flexibility, better excess to markets, policy wording and structure. Self-Insurance and deductibles are great, but the captive assuming risk maybe a better choice.
Carrier Relationships
Does the wholesaler have strong senior management connections within the markets? These relationships can influence negotiations and placement success.
Be Collaborative
If the retailer says ask for a call with the market, make it happen who knows the client and the strategy better.
Market Conduct & Strategy
A wholesaler that canvasses the market without your permission or a strategic plan is not an ideal partner.
Specialized Expertise
If your brokerage lacks expertise in a niche line (e.g., aviation, medical professional liability), a wholesaler with deep knowledge in that area can be a valuable partner.
Turnaround Time
Fast response times are critical. Every wholesaler I spoke with emphasized the importance of efficiency.
Regulatory Compliance in International Markets
Many international markets, such as London and Bermuda, have strict regulatory compliance laws that dictate who can place business with certain carriers. Only licensed brokers in these regions can access Lloyd’s syndicates or Bermuda markets. Choosing a wholesaler with the right regulatory credentials is imperative to ensure compliance and avoid legal complications. Some retailers believe that having a broker physically located in these markets provides an advantage.
Liability Considerations
Larger retail brokers are often concerned that a wholesaler’s mistakes—whether in placement, policy terms, or misinterpretation of coverage—could damage the client relationship and expose the retail broker to liability. Ensuring the wholesaler has strong E&O coverage, a solid reputation, and a track record of accuracy is crucial in mitigating this risk.
Fee Transparency
All fees and commissions should be disclosed upfront to ensure a clear and fair partnership.
Key Considerations When Using a Wholesaler
While wholesalers can be valuable partners, there are key factors to keep in mind:
Potential Conflicts of Interest – Many large brokerage firms own their own wholesale operations, which can create internal competition or limit external wholesaler options.
Loss of Direct Carrier Access – When working through a wholesaler, retail brokers may have less direct interaction with insurance carriers, which can affect negotiations and influence.
Placement & Coverage Accuracy – If a wholesaler misinterprets terms or places coverage incorrectly, it can lead to gaps in coverage and potential E&O exposure for the retail broker.
Market Strategy Risks – A wholesaler that submits accounts to multiple markets without coordination can cause confusion and hurt the broker’s ability to negotiate favorable terms.
Retail Broker’s Reputation – A wholesaler’s performance reflects on the retail broker. If the wholesaler fails to deliver, it could impact on the broker’s relationship with the client.
Selecting the right wholesaler is about more than just market access—it’s about expertise, strategy, trust, and risk management. By thoroughly vetting potential partners and understanding both the benefits and challenges, retail brokers can make informed decisions that strengthen their client relationships and business success.
Real-World Example: The Importance of the Right Wholesaler
Consider a situation involving a large teaching institution. The client insisted on including London markets in the placement, so I engaged a London broker they had selected. Unfortunately, the broker missed the deadline to provide a quote before an important client meeting. To make matters worse, instead of working through the established retail brokerage relationship, the London broker went directly to the client and signed a contract—bypassing the retail broker entirely.
This situation underscores a few key lessons:
Responsiveness Matters
Missing critical deadlines can jeopardize deals and client confidence.
Clear Roles & Boundaries
A wholesaler should respect the retail broker’s relationship with the client, not compete with it.
Strategic Partnerships Are Key
Selecting a wholesaler with integrity and a commitment to partnership prevents these types of conflicts.
By carefully vetting wholesale partners, retail brokers can avoid similar challenges and ensure smoother placements that align with client expectations.
Closing Thoughts
Selecting the right wholesaler is about more than just market access—it is about trust, expertise, and strategy. A strong wholesaler relationship enhances a retail broker’s ability to serve clients, while the wrong choice can create unnecessary challenges.
As seen in the real-world example, a wholesaler’s lack of responsiveness or failure to respect the retail broker-client relationship can lead to missed opportunities and even reputational risk. To avoid these pitfalls, retail brokers should thoroughly vet potential wholesale partners, set clear expectations, and maintain open communication.
By taking a strategic approach to wholesaler selection, retail brokers can build long-term, successful partnerships that benefit all parties involved—ultimately leading to better solutions for clients and a stronger position in the market.
About the Author
Bonnita (Bonnie) Boone is a former insurance executive and the founder of Pro Vista Risk Consulting. She has over 39 years in experience developing markets, operational processes, sales/growth, and overall corporate strategy. She has been a specialist in healthcare, hospitals, doctors, managed care, and Academic medical centers, mainly focusing on captives, reinsurance, professional liability, and other lines of coverage.
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