Wholesale insurance serves as an important bridge within the insurance ecosystem, linking specialized risks with suitable coverage solutions that are not typically available through standard insurance channels. This specialized segment of the insurance industry caters to the nuanced needs of businesses and individuals facing complex or high-risk scenarios, ensuring that they can secure tailored insurance policies that adequately protect against potential losses.
By leveraging the expertise and networks of wholesale brokers, clients gain access to a broader range of insurance products, including those designed for niche markets or extraordinary risks. Hence, whether you are a business owner seeking coverage for hard-to-insure assets or an individual with unique risk factors, understanding the role and benefits of wholesale insurance can be a pivotal step toward achieving comprehensive protection.
What is wholesale Insurance?
Wholesale insurance is also known as franchise insurance. Wholesale insurance refers to a specialized segment in the insurance industry where wholesale brokers operate as intermediaries between retail brokers or agents and insurance carriers. Still, they do not communicate directly with the insured.
These brokers specialize in hard-to-place, high-risk, or specialized insurance policies that may not be readily available in the standard insurance market. What’s more, this type of insurance provides coverage for employer groups that are small and unable to qualify for true group coverage. Thus, it will offer coverage to the whole group, but separate policies will be written for every party to receive insurance.
How Does it Work?
Here is a detailed look at its workings, coverage, exclusions, costs, and acquisition process:
- Identification of Needs: A retail broker identifies a client’s specific insurance needs that are hard to fulfill in the standard market.
- Engagement of a Wholesale Broker: The retail broker then approaches a wholesale insurance broker who has access to specialty markets and products.
- Market Search and Policy Customization: The wholesale broker uses their expertise and connections with various insurance carriers to find and tailor insurance policies that match the unique needs identified.
- Policy Issuance: Once a suitable policy is found, the wholesale broker facilitates the issuance of the policy through the insurer.
- Acting as an Intermediary: Throughout the policy term, the wholesale broker may act as an intermediary for any claims, adjustments, or renewals.
What Does Wholesale Insurance Cover?
Here are the types of wholesale insurance and what they cover: Wholesale insurance can cover a wide range of risks and hazards, depending on the needs of the policyholder. Coverage options are broad, including but not limited to:
- Professional Liability: Errors and Omissions, Malpractice.
- Commercial property: buildings, inventory, equipment.
- Product Liability: For damages caused by a business’s products.
- Cyber Liability: Protection against data breaches and cyber-attacks.
- Directors and Officers Insurance: For claims against the company’s officers.
- Excess Liability/Umbrella Insurance: Provides additional coverage beyond existing policy limits.
- Commercial Auto: For fleets or individual commercial vehicles.
- Workers’ Compensation: For employee injuries on the job.
Nevertheless, it is important to remember that the coverage that any wholesale insurance policy offers depends on the insurance company.
What Does It Not Cover?
The exclusions in wholesale insurance policies vary widely based on the policy type, insurer, and specific risks insured. However, common exclusions might include:
- Intentional acts: damages or injuries caused intentionally by the insured.
- War and Nuclear Hazards: Damages from war-related activities or nuclear risks.
- Wear and tear: standard degradation or deterioration of property over time.
- Contractual Liabilities: liabilities assumed under a contract that wouldn’t exist in the absence of the contract.
- Certain Natural Disasters: Some policies may exclude specific natural disasters like earthquakes or floods unless specifically covered.
This is another part of the policy that is determined by the insurance company or provider as well.
How Much Does Wholesale Insurance Cost?
The price of purchasing a wholesale insurance policy differs based on various factors. For example, the insurance company, the type of coverage, the underwriting requirements of the insurer, the risk level, the policy limits, and deductible amounts. As a result of the nature of covering specialized and higher-risk scenarios, it can be more expensive than standard insurance policies, and the costs can range from a few hundred to thousands of dollars annually.
How to Get Wholesale Insurance
Obtaining wholesale insurance, which is essential for businesses with unique or high-risk insurance needs that standard markets won’t cover, involves a series of steps. These steps ensure that your business gets the specialized coverage it needs. Here is a streamlined process to guide you through securing wholesale insurance:
Identify your insurance needs
First, thoroughly assess your business operations to identify potential risks that might not be covered under standard insurance policies. Consider areas such as property, liability, professional errors and omissions, and any industry-specific hazards.
Consult with a retail insurance broker
Find a reputable retail insurance broker or agent experienced in your industry. They will have the expertise to evaluate your coverage needs and identify any gaps in your current policies. Explain your specific concerns and the nature of the risks your business faces.
A retail broker partners with a wholesale broker
Since wholesale brokers work directly with retail brokers rather than the insured party, your retail broker will seek out a wholesale broker specializing in the type of coverage you need. Wholesale brokers can access specialized markets and insurers that offer policies for unique or high-risk scenarios.
Provide detailed information
Be prepared to provide the wholesale broker with detailed information about your business. This may include financial records, operational procedures, existing coverage, and any claim history. The more information you can provide, the better they can assess your needs and find suitable coverage options.
Review your options
Once the wholesale broker presents the available insurance options, please review them carefully with your retail broker. Evaluate the extent of coverage, exclusions, premiums, deductibles, and any policy limits. Ask questions and consider how each option fits your risk profile and budget.
Finalize and Purchase Coverage
After selecting the best insurance policy for your needs, work with your retail broker to complete the purchase. They will facilitate the process with the wholesale broker and ensure that the policy is correctly issued.