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Old 09-28-2018, 10:18 AM
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Gareth Keenan Gareth Keenan is offline
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Default Wholesale Intermediaries?

Hi, I'm reading up on some literature about E&S lines, and there's reference to a material distribution channel called wholesale intermediaries, or wholesale brokers.

How does this distribution channel work? My experience has been primarily in personal lines where I'm familiar with a traditional Independant Agent or an Exclusive Agent, but in those instances the intermediary is the only party separating the insurer and the insured.

How do wholesale intermediaries work for commercial or E&S sellers? Why are they necessary? Couldn't you just have a traditional broker who deals with commercial clients?

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Gareth Keenan
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Old 09-28-2018, 02:01 PM
Beach Bum Beach Bum is offline
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Often for hard to place risks or classes of business. Also, many local commercial agents will have access to a typical group of carriers. Still, what if the local crain company or strip club or marijuana dispensary or high rise window washer comes to your door looking for insurance. You probably can't place it at your normal carrier relationships, at which point you look to the wholesale market.

The wholesale broker/agent then has additional carriers, often times but not always E&S/non-admitted ones, that may be willing to write that. At times the distribution channel doesn't stop here, there may be yet another round of MGA/agents involved. Hope that helps.
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Old 09-28-2018, 02:11 PM
examsarehard examsarehard is offline
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Also note that there are licensing requirements to be a surplus lines broker. The broker may not encounter a particular coverage enough to bother with obtaining the additional license. It's also more difficult to negotiate commission with a carrier when you're only sending them a handful of policies a year.
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