Building a Team of Experts: Partnering with a Wholesale Broker
In this edition of AV Insurance Blog we take a look at the role and value of a good Wholesale Broker.
The International Risk Management Institute (IRMI) defines a Wholesale Broker as “A type of insurance broker who acts as an intermediary between a retail broker and an insurer…” who “often possess specialized expertise in a particular line of coverage or in a line of coverage that is unusual and/or have greater access to or influence with certain insurance markets, which is especially valuable when dealing with a difficult-to-place risk. [emphasis added]”
Let’s back up a bit and define Retail Broker for clarity.
A Retail Broker is the point of contact for an Autonomous Vehicle Company seeking insurance. He accesses products from insurance companies, both directly and with the assistance of Wholesale Brokers.
Why does there need to be a Wholesale Broker at all?
Because in the US many carriers—including those focusing in emerging and disruptive industries—choose not to be licensed directly in various states. This allows them the flexibility to offer more specialized coverage and competitive pricing. Both are critical to the scale and success of Autonomous Vehicle Companies.
How does a typical Wholesale Broker relationship work, how should it work, and why?
“Surround yourself with people who are smarter than you.” – Russell Simmons
A good Retail Broker knows their strengths and weaknesses and seeks out a team to complement both. A good Wholesale Broker adds:
Coverage knowledge and expertise
An expert Wholesale Broker is in the marketplace daily and exclusively. Constant interaction means more face time with underwriters, building trust and driving resultsMarket access
Carriers value the industry and coverage specialization of Wholesale Brokers, and offer them exclusive access and programs that Retail Brokers cannot utilizeTeam support
The Wholesale Brokerage team brings a streamlined marketing approach. This frees the Retail Broker to respond to daily servicing and strategic thought on behalf of the Autonomous Vehicle Company
There are some common myths around engaging a Wholesale Broker. Let’s dispel those.
Myth: too many brokers involved dilutes the message to underwriters.
Reality: Like many myths, there’s truth at the core of this. Here’s how the typical distribution channel often looks:
It’s a game of telephone. There are two reasons Retail Brokers hold to this structure:
It’s always been done this way (which is a bad reason for anything), and;
It controls the relationship and gives the perception of total concentration of knowledge in their hands.
This is a fallacy. You can’t be an expert in all things to all people. A good Retail Broker knows that, finds experts to add value, and encourages everyone to communicate freely. You tell your story best. The IOA model facilitates open and direct communication among all parties, and looks like this:
Myth: Adding another broker increases the commission paid and costs more money
Reality: In most cases, the total commission remains the same with the Retail and Wholesale brokers sharing. This validates that your Retail Broker is truly invested in the success of the Autonomous Vehicle Company. He is sharing commission to ensure the right job gets done.
I recently received the following feedback from one of my valued AV clients, after talking through a complicated renewal with the involvement of the Wholesale Broker: “I’m really glad you were involved. The Wholesale Broker has always been a black box in my insurance dealings. It’s great to have the expertise communicated directly.”
Add client intake link from Broker Buddha
The IOA Innovation Team is proud to partner with great resources in the Wholesale Brokerage space, including:
-Chris Moulder, Worldwide Facilities (Auto, Liability)
-Steve Vallone, Worldwide Facilities (Cyber/Errors & Omissions, Product Liability, Executive Management Liability)
-Tom Donnelly, CRC (Executive Management Liability, unicorn valuations)
-Ted Pike, Besso UK (Access to ibott, Lloyds of London)
