Page 122 - The UnCaptive Agent

INSURANCE CARRIERS 95

excess and surplus lines accounts, and the occasional
hard-to-place standard market account for which the
agency had no standard lines insurance carrier. For
startup agents, wholesalers have become popular, even
for accessing standard market insurance carriers where
the small agent can’t convince the insurance company
to give them an appointment (though it is typically
much more lucrative to access standard market car-
riers through a Market Access Provider or Agency
Development Organization than a wholesaler or E&S
broker). Wholesalers and MGAs are a form of inter-
mediary between some insurance companies and retail
insurance agents. The MGA or wholesaler takes the
place of the carrier’s field management force and per-
forms the due diligence to determine which agents may
be allowed to write business with them. The MGA or
wholesaler is the traditional means of accessing the
excess and surplus lines market for retail agents, as well.
There are thousands of MGAs, brokers, and whole-
salers in the United States. Most of them represent
the same (or similar) carriers. So, it’s imperative for
the retail agent to pick the MGA they choose to work
with based on relationship and service provided (or in
some limited circumstances, based upon a retail agent’s
niche of business).
It is important for you to choose wisely, and you
only need to have a relationship with one (or at the
most, two) generalist MGAs. I often see small agencies
appointed with six to ten of these brokers. All that does
is spread a relatively small amount of business among
a relatively large number of brokers, which satisfies no
one and gains the retail agent no relationships of value.
Wholesalers and brokers are typically paid twenty to
twenty-five percent of the premium as commission
from the carrier. They, in turn, typically pay agents ten