Wholesale Brokers Take Center Stage Amid Insurer Retreat
For years, wholesale insurance brokers often played a secondary role in the insurance market. Now, however, their importance has dramatically increased.
Mark L. Kaufman (pictured), executive vice president and partner at XPT Specialty, a private equity-backed firm, observed that wholesalers are now indispensable, especially in challenging markets like California. He noted a significant shift where wholesalers are essential to help retailers navigate a complex marketplace.
The retreat of standard carriers from the admitted market has amplified this reliance. Kaufman pointed out that standard markets are no longer writing personal lines policies in California. Wholesalers step in to provide that much-needed expertise and support.
The days of wholesalers being an afterthought are long gone. If anything, we’re more essential than ever.
The Wholesale Advantage
Wholesalers have a competitive edge through their exclusive access to markets. Kaufman stressed that the advantage extends beyond just placing business, emphasizing the importance of relationships. Wholesalers offer significant handholding, explaining coverages, and tailoring insurance plans to meet the specific needs of retailers and insured parties. This approach differs from the transactional nature of relationships that retailers often have with direct carriers. Instead of just processing submissions and discussing production numbers, wholesalers offer a deep dive into each submission.
XPT, for instance, takes a unique approach to servicing small and mid-sized accounts. They recognize the value of properly servicing these accounts. This commitment lets retailers offload small business accounts without sacrificing service or profitability. Kaufman highlighted this commitment as a core pillar of their business.
The Future of Wholesale
As the market evolves, Kaufman anticipates an even greater role for wholesalers. The combination of rising risk complexities and the departure of standard markets means more retailers are relying on wholesalers not just for placement, but for guidance as well. Wholesalers are actively helping retailers secure deals in a challenging market and provide retailers with every advantage. The focus, according to Kaufman, is about understanding the needs of the retailer and the insured to find the best possible solution.
With retailers continuing to need this expertise, the role of the wholesaler is set to grow further.
