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Retail Agents – Are You Paying For Two Wholesale Brokers Instead Of One?


David Huss - Dec 7, 2017

In a previous article, 5 Ways Retail Agents Pay For Their Wholesale Insurance Broker, I explain how poor service is one of the ways retail agents actually do pay for their wholesale broker.  That article is as accurate now as it was then, but it was only part of the story for many retail agents and their support staff.  For those working with large, national wholesale insurance organizations internal referral protocols may well mean you are paying for two wholesale brokers instead of one!

Big, national wholesale insurance organizations can certainly place many different kinds of risks.  And despite a compensation structure that typically incents their production staff to place any kind of business from anywhere, there are still people within those organizations who specialize to some degree.  While rarely true specialists when it comes to healthcare, there are those within these organizations that actually know it pretty well.

Here’s the problem: the healthcare-focused broker inside these enormous wholesale insurance organizations often become the gatekeepers for all the healthcare opportunities within that organization due to internal referral protocols.  They are the place to which all the other brokers who know little or nothing about healthcare go to get their opportunities marketed.  Internal referral protocols are good for wholesale organizations as they help to maximize revenues.  They are also a pretty good deal for both wholesale brokers – especially the “internal healthcare expert” who enjoys the benefit of submission activity they don’t need to work for.  But for the retail agent and their support staff – the customers – it’s often not such a good thing.

Take for example the retail agent working with the wholesale broker who knows little about healthcare risks – the one referring the opportunity to the “internal healthcare expert”.  Internal referral protocols often not only result in this retail agent having to deal with their primary wholesale broker’s lack of healthcare knowledge and experience, but also the consequences of having yet another wholesale broker through which information must flow before they can get what they need for their own clients.  These consequences include:

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

At the very least the marketing process often will take significantly longer to complete.

The situation is also far less than ideal for the retail agents and support staff that have a direct relationship with the “internal healthcare expert” – the very same retail professionals that probably have a significant focus on the healthcare space themselves.  These customers are forced to compete for their wholesale broker’s time and attention not only with other retail clients that also access this individual directly, but with every other non-healthcare focused wholesale broker in that organization sending them healthcare opportunities their own retail agents trip over!  The result is often a service level that is far below what it should be for the retail customers that should be receiving the most attention.

Internal referral protocols negatively impact retail agents and their support staff in other ways as well – most notably as a result of their impact on underwriters.  I have spoken with a number of healthcare underwriters about internal referral protocols and all tell me a similar story about their experience.  Basically (and not surprisingly), when a second wholesale broker is added to the equation the marketing effort suffers, as underwriters often:

  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.

Bottom line?  Internal referral protocols pertaining to healthcare opportunities at large, national wholesale brokerages often result in underwriters that are less motivated to provide prompt service and competitive terms.

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.

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.

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