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Retail Agents – Are You Paying for Two Wholesale Brokers Instead of One?

David Huss - Sep 23, 2021

In a previous article, 5 Ways Retail Agents Pay For Their Wholesale Insurance Broker, I explain how poor service is one way retail agents pay for their wholesale broker. However, that’s only part of the story for many retail agents and their support staff. For retailers working with large wholesale insurance organizations, you may be paying for two wholesale brokers instead of one!

Big, national wholesale insurance organizations can certainly assist with the placement of many kinds of risks. Despite a compensation structure that incentivizes their production staff to place any kind of risk regardless of where it comes from —there are still those within these organizations that specialize to some degree.

Here’s the problem: the healthcare-focused broker often becomes the gatekeeper for all healthcare opportunities within that organization due to internal referral protocols. They are the go-to healthcare person. This often works well for the ‘internal healthcare expert’, who enjoys the benefit of submission activity they didn’t work for. But for the retail agent and their support staff, it’s often a negative thing.

What about the retail agent collaborating with a broker who knows little about healthcare risks? Internal referral protocols may result in the retail agent benefitting from the ‘internal healthcare expert’ who knows more about the healthcare space than the initial broker, but at what cost? The retail agent has no prior relationship with the ‘internal healthcare expert’, nor are they likely to have much more healthcare business to send their way. In the end, they won’t be a priority.

And, of course, internal referral protocols mean there is yet another wholesale broker through which information must flow, resulting in:

  1. Decreased efficiency
  2. Significantly greater likelihood for errors leading to coverage problems
  3. Increased E&O exposure

The situation is also not ideal for the retail agents and support staff that have a direct relationship with the ‘internal healthcare expert’ – retail professionals that likely focus on the healthcare space themselves. These customers are forced to compete for their wholesale broker’s time and attention.

Worse yet, internal referral protocols in these large wholesale organizations effectively increase the retail agent’s own competition because any retail agent can now access an ‘internal healthcare expert’. This is great for wholesale brokers and their organizations, but not for retail customers that should receive the most attention.

Internal referral protocols negatively impact retail agents and their support staff in other ways too. Most notably, this applies to underwriters. Usually, when a second wholesale broker is added to the equation, the marketing effort suffers. Underwriters then experience the following:

  1. Receive lower quality submissions on average
  2. Struggle to get the information they need
  3. Experience lower hit ratios
  4. Ultimately waste more time on these submissions.

The bottom line? Internal referral protocols result in underwriters that are less motivated to provide prompt service and competitive terms.

Ethos Insights:

  • Internal referral protocols are good for wholesale brokers, but they are not good for retail agents/support staff or underwriters.
  • Retail agents/support staff dealing with internal referral protocols are paying too much for their wholesale broker.
  • Ethos’ healthcare focus and lack of internal referral protocols benefit their retail clients’ books and bottom lines.

Ethos Insurance Partners, Inc. is exclusively focused on the placement of healthcare risks and that makes us true healthcare experts.  In addition, Ethos only accepts submissions from the retail agents and support staff with whom we partner directly.  That means our retail clients never need to deal with the problems associated with internal referral protocols.

Got healthcare? Give Ethos a call.

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