What is a Wholesale Insurance Broker?

The insurance industry is a large assortment of professionals and entities working together. Some serve consumers directly, others serve insurance agents, and others still serve insurers themselves.

The main roles involved in the insurance sector are:

• Retail Agent: An insurance agent working between insurance buyers and their appointed insurance companies to provide insurance products.
• Wholesale insurance brokers: An insurance broker who specializes in wholesale products. This is an intermediary between retail agents and insurance carriers. Most importantly, brokers work with multiple providers, and wholesale brokers offer niche products.
• Managing General Agents (MGAs): An MGA is an intermediary between retail agents and insurance providers as well. The MGA has special authority to underwrite policies, changing risk coverage and prices on behalf of insurance providers.

In this article, we’ll break these roles down further, focusing mainly on the wholesale insurance broker and what they do.

What is a Wholesale Insurance Broker?

A wholesale insurance broker is a bridge between retail insurance agents and insurance providers. They don’t work directly with consumers but as an intermediary between insurance providers and agencies to find niche products to fit unique customer needs.

In the traditional insurance market, most policies are pre-packaged and one-size-fits-all. There are several options across a range of insurance types to fit a variety of industries and individuals. However, there are some job types and insurance needs that call for custom insurance products.

Wholesale insurance brokers go above and beyond to procure customized insurance coverage not offered by traditional agencies.

Advantages of Partnering with a Wholesale Insurance Broker

Working with a wholesale insurance broker provides a myriad of incentives, including:

• Expertise in Niche Products: Wholesale insurance brokers have insight into specialty insurance lines like cyber liability.
• In-Depth Market Knowledge: Wholesale brokers have knowledge and experience with unusual insurance products like Halloween and Haunted House Insurance for spooky events like zombie runs.
• A Specialized Network: Wholesale insurance brokers need to customize some products to fit narrow niches. They have vast networks, including specialized underwriters with the ability to modify bespoke insurance products.
• Finding Insurance that Doesn’t Exist: Believe it or not, some wholesale insurance brokers even find insurance policies for entirely new professions or purposes.
• High-Risk Coverage: One area where wholesale brokers shine is in high-risk coverage. Where one insurance agency refuses to cover a consumer, a wholesale broker can find a provider who will.

Wholesale insurance brokers are indispensable for retail brokers, agents, and insurance companies looking to connect with unique products. They can provide coverage for risks and injuries not normally covered by traditional products.

Understanding the Distinction: Wholesale Insurance Broker vs. MGA

Wholesale insurance brokers are sometimes confused with Managing General Agents. MGAs are similar in that they work as an intermediary between brokers and insurers. They differ in other ways. Here’s a rundown of each.

Wholesale Insurance Brokers

Wholesale insurance brokers work with agents and insurers. They specialize in unique and high-risk insurance products. A wholesale insurance broker shops around to find the best coverage for individual solutions. They work with various carriers rather than a single insurer.

Wholesale insurance brokers have unique insight into niche markets because of their extensive networks. They work with industry leaders across a wide range of industries and job types.

Managing General Agents

MGAs also work between brokers, agents, and insurers. They differ in that they have the authority to underwrite policies on their own. They can finalize a policy on behalf of the insurance carriers they partner with.

MGAs have advanced control over coverage terms and prices. They can customize an existing insurance product to meet the needs of a diverse customer base. MGAs usually have a special area of focus or work in particular sectors with specific types of insurance.

The Core Difference

The main difference between wholesale insurance brokers and MGAs is the level of authority each has. Both offer unique and niche products. Both work as intermediaries between agents, brokers, and insurers. Wholesale brokers have a broad network of insurance providers and underwriters to work with. MGAs can underwrite policies as needed.

Common Wholesale Insurance Products and How They Work

Wholesale insurance products come in all different shapes and sizes. There is a growing demand for insurance products to fit niche markets. This is where wholesale insurance brokers come in. Some of the common areas where niche specialty insurance coverage is needed include:

Fine Art and Specie Insurance

This unique product protects valuable goods in transit or while on display at a third-party space. Examples of products covered by specie insurance include:

• Diamonds
• Paintings
• Sculptures
• Valuable documents
• Cryptocurrency

A museum, art gallery, or private collector might procure specie insurance for an event.

Cyber Liability

Cyber liability insurance is becoming a more common offering, but there are still niche facets within the product. Wholesale insurance brokers are familiar with the nuances of cyber security risks. They can recommend and locate insurance products to cover unique digital landscapes.

Employment Practices Liability Insurance

Companies with long histories of Human Resources issues often seek additional coverage to safeguard the company from employee lawsuits. A retail agent would seek a wholesale insurance broker for this product if a client was dealing with a lot of potential employee lawsuits.

Directors and Officers Liability Insurance (D&O)

D&O insurance protects the directors and officers of corporate entities. The coverage stretches to spouses as well. This insurance product is put in place to cover lawsuits by employees, competitors, customers, or even investors.

Hard-to-Place Risks

Any insurance policy covering a risk that is hard to place falls to a wholesale insurance broker. Some hard-to-place risks include:

• High-risk construction: Field-based services like construction work outside of an office building fall in this category. They use heavy-duty machinery and are placed in perilous working conditions. This requires specialized coverage due to higher-than-normal risks.
• Excess and Surplus Lines: Excess and surplus lines are a specialty market. It offers insurance on the types of things a traditional insurance company doesn’t normally protect against. Here are just a few examples: Halloween and Haunted House businesses, and property owners in wildfire, earthquake, or coastal zones.

Is a Wholesale Insurance Broker Right for You?

If you’re an insurance broker working with customers in a unique and hard-to-cover field, the answer is yes. A wholesale insurance broker is right if you are unable to find an insurance policy for your client’s needs. In most cases, a wholesale broker can help.

Wholesale insurance brokers cover a wide range of niche products and industries. They support high-risk clients and have a vast network of underwriters and insurance providers to connect with.

For more information about wholesale insurance brokers or to request a quote, contact us.

This article is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.