If you’re looking for casualty or property insurance, it may
be helpful to learn the difference between retail and wholesale insurance
agencies. The difference in these two types of policies will determine the type
of coverage you have, since there are different risk exposure regulations for
retail insurance than there are for wholesale
insurance.
Retail Insurance
The retail insurance market is made up of licensed
professionals who create insurance policies underwritten by companies known as
“admitted carriers.” If you’re looking for insurance, the usual process would
be to contact your agent, who then finds a policy for you based on the
insurance companies who are qualified to conduct business in your state. These
insurance carriers are under strict supervision by the Department of Insurance
for your state, and are licensed according to the state’s regulations.
Wholesale Insurance
If you have special coverage needs and aren’t able to find
admitted carriers in your state because you don’t meet the risk guidelines,
wholesale insurance may be the best option for you. For this type of insurance,
the insurance producer will hire a broker or agent to find a carrier for you.
The agent or broker, referred to as a surplus line producer or wholesaler,
often has specialized capabilities when it comes to getting the policy that
works for you. These professionals serve as the middleman between the retail
insurance and the insurance carrier with the necessary resources. Wholesalers
are required to have a surplus lines license, since they are in such a unique
market. The insurance carrier in the wholesale insurance market are known as
“non-admitted carriers,” and are usually not licensed by your state.
How Does the Wholesale Market Work?
Wholesale insurance gives you coverage for risks that are
outside of the risk coverage for admitted carriers. It is possible to find
wholesalers that specialize in specific areas like providing health plans for
small businesses or administering benefits for employees. It is very rare that
a wholesaler will have direct contact with you, unless you’re applying for the
insurance needs that directly affect your business. The fact that wholesale
insurance providers are not regulated by your state should not be cause for
alarm. The rules for filing and reporting are simply different for wholesalers.
Since these insurance professionals are not under the laws of your state, the
pricing is more flexible. This ensures that you are covered even in the most
unusual circumstances. However, it is still best to check the financial
stability of the wholesaler you’re considering and to get customer reviews if
possible, so you can find the company that is best for you.
Wholesale Insurance Products
Once you decide that wholesale insurance is
right for you, you’ll have several products to choose from. There are high-risk
products for damage from chemicals or a fire. There are also safety products
pertaining to transportation, and structural integrity products to protect you
if something goes wrong with the construction of your building. If you’re in
the medical professional, wholesale insurance against medical or pharmaceutical
product failure may be necessary. You can even purchase a privacy protection
product to protect you from identity theft. Be sure to explain the nature of
your business in detail to your provider to ensure you get the right products
to help your business run smoothly.
