The Difference Between Wholesale and Retail Insurance

When you are in the market for insurance products that don’t conform to risk exposure guidelines or for products beyond the expertise of retail agencies, you will need to turn to a wholesale insurance agency. Although it isn’t a top interest for most people, it is wise to know the difference between wholesale and retail insurance agencies.

What You Should Know About Wholesale and Retail Insurance Agencies

Retail insurance market

The retail insurance market is generally comprised of licensed producers generating insurance policies that are underwritten by admitted carriers. When someone is looking for property or casualty insurance – the two most popular forms of coverage – usually, an agent or broker will find a policy from an insurance carrier that is licensed to do business in the state. The licensed carrier, called admitted carriers, are under stringent regulatory supervision by the state’s Department of Insurance. The insurance producers are also licensed, and will also be under strict regulatory supervision by the state.

Wholesale insurance markets

Oftentimes, producers are unable to find admitted carriers because the risks don’t conform to carrier risk guidelines. In some cases, the coverage might require expertise that is beyond the capability of the insurance producer. In these situations, the producer will enlist the help of a broker or agent to find a carrier. They may even require the assistance of a broker or agent who has specialized capabilities. This new broker or agent, who is now called a surplus line producer, acts as the middleman between the retail producer and the carrier with the required resources. This person in the middle is called a surplus line producer – also known as a wholesaler.

The wholesale market provides coverage for threats and risks that are outside of the admitted carrier’s service. Some wholesalers will be able to provide specialized coverage, such as employee benefits and health plans for small businesses. Generally, wholesalers do not have direct contact with the insured except in instances such as employee benefits and health plans.

Knowing the difference between a retail insurance agency and a wholesaler can help you in your quest to find reliable coverage.

ABOUT RMS Insurance Brokerage, LLC

At RMS Insurance Brokerage, LLC, our expertly crafted policies are written specifically for the hospitality industry. We offer custom-tailored solutions to meet any venue’s specific needs. For more information, contact our knowledgeable experts today at (516) 742-8585.