Wholesale brokerage involves bridges the gap between an insurance company and a retail insurance agent. The wholesale broker has no communication with the person who is given the insurance cover. He processes the business brought forward by a retail broker. The wholesale broker has contacts with the contractors insurance company. The wholesale broker can also act as a retail broker depending on the circumstance. The broker is an expert on a particular insurance line. They, therefore, can influence different things in the market. The retailer's firms cannot handle some risks. These are submitted to the wholesaler as they can cover them. Retailers must identify the wholesalers who can effectively meet the needs of their clients.
The insurance coy compensates a broker through commissions. There is a certain percentage that is paid to the wholesale broker according to the insurance policies that they buy for their clients. The wholesaler retains some commission, and the rest is given to the retailer agent. Retailer brokers should understand the amount that is retained by the wholesaler.
The wholesale agents usually levy charges for their services. These charges depend on each brokerage firm. The wholesale endeavors to charge a reasonable amount to allow the retail agent also to charge the appropriate fee. The services of the wholesale have a great impact on the relationship between the retail agent and the client. A prompt service makes clients refer others as well as bring more business. A good wholesale agent impacts on how the retail broker manages the client expectations. The history of the wholesaler is very crucial in deciding on whether to engage him or not. One of the major issues pertains to the ability of a dealer to close the submission successfully.
A wholesaler receives submissions from retailers before they can agree to handle business. The information requested by the wholesalers is the same as the one that is asked by contractors insurance firms. The only difference is that it is not required to be presented in a particular format. The purpose of this information is to verify the kind of business that the retailer wants to be submitting to the wholesaler. The wholesaler would also want to engage a retailer who is experienced and has a strong financial muscle.
Wholesalers always sign a contract with the retailer before they can begin transacting. There is no standard contract for this kind of an arrangement. Therefore, each wholesaler designs a contract with the terms and conditions of his own.