With unique and hard-to-place risks, brokers absolutely need an ability to react quickly to market changes, to accommodate non-standard needs of insureds and to craft innovative solutions for complex and emerging risks. For me, this is a hallmark of our industry and it is where wholesale, specialty and surplus lines professionals excel.

The wholesale model – a North American perspective 

The wholesale distribution system delivers tremendous value to retail insurance agents and insurance consumers. WSIA member wholesale brokers and underwriters are technical specialists who are immersed in this segment of the industry. A solutions-oriented approach and real-time knowledge of the market, capacity and pricing, coupled with access to markets, coverages and options that might not be available in the standard market, offer tremendous value to the insured.

Those of us working in the industry know that there has never been a cost for seeking a wholesale quote and we can also demonstrate there is no additional expense for the insured in using a wholesale specialist to develop a solution. A 2016 Conning, Inc. cost-effectiveness study, commissioned by WSIA, found that wholesale brokers offer technical expertise, innovative solutions to complex risk, and access to strong and stable insurers with no added cost to the transaction. 

The Conning, Inc. analysis compared non-loss cost ratios among carriers with retail-focused and wholesale-focused distribution approaches. It found that US insurers leveraging the wholesale channel generally enjoy reduced administration costs exceeding wholesale acquisition costs. Measuring non-loss cost ratios from 2010 to 2015, the study found the non-loss cost ratios in its wholesale composite of 31.1% were 1.0% lower than the retail composite ratio of 32.1%, which can be attributed to the efficiency of leveraging the binding authority/MGA/wholesale brokerage structure, rather than a much larger volume and less efficient retail structure to manage distribution.

London market 

The US wholesale distribution system also offers unique value specific to the London market. The majority of US retailers know when and how to leverage a US wholesale broker to gain access to the high level of expertise and experience that’s necessary to trade directly in the UK on their customer’s behalf. Interconnected is the US wholesaler’s experience in navigating the complex state-based regulatory system in the US, which I believe provides tremendous value for London market participants and others that may not be licensed in the United States. 

Experience counts

WSIA members include tens of thousands of individual brokers, insurance company professionals, and underwriters who are dedicated to creating these cost-effective specialty insurance solutions for consumers. We live these complex risk solutions every day, and we know that when retail agents and wholesale brokers work together, all parties can be part of a successful transaction with a custom solution for the insured. 

Joel Cavaness is WSIA President | President, Risk Placement Services.

About WSIA

WSIA is a non-profit association of professionals and specialty market leaders dedicated to the wholesale distribution system. Formed in 2017, it represents the interests of its members and the valuable role they play in the insurance market through networking, education, talent recruitment and development, regulatory and legislative advocacy for the wholesale, specialty and surplus lines industry, and by promoting the value of the wholesale distribution channel.

About Joel Cavaness - President of WSIA

Since 1997, Joel D. Cavaness has served as President of Risk Placement Services, Inc. (RPS). After cofounding RPS, he has been instrumental in driving its rapid growth to become one of the largest US wholesale brokers, managing general agents and program managers. Joel currently leads a team of nearly 3,000 professionals in more than 80 offices.

Prior to establishing RPS, Joel was President of International Special Risk Services, Inc. (ISRS), which provided specialized insurance placements for Gallagher’s retail customers in the areas of Public Entity, Property, Casualty, Personal Lines and Equipment Breakdown. He joined Gallagher in St. Louis in 1986 as a marketing representative. Before joining Gallagher, he spent several years as a casualty underwriter for standard and excess/surplus lines carriers.