Fast Focus
	Wholesale brokers know how to find the best underwriter for hard-to-place coverage.
	It’s a two-way street: E&S carriers trust high-risk submissions from trusted wholesale brokers.

Specialty Agent

Wholesalers take on the impossible missions, placing coverage no one else can.

By  Paul Springman

It started when babies in China were sickened. It spread rapidly making thousands more ill. The culprit was quickly identified: residue from melamine, a highly toxic chemical that was finding its way into dairy and non-dairy cream products made in China and used by others as an ingredient in their products. The scare caused Cadbury, Britain’s largest chocolate manufacturer, to recall 11 products.

The melamine scare was only the latest in a number of concerns about products manufactured in China. Last year, it was pet food and toothpaste imported from China that set off alarms in the U.S. Yet, American manufacturers continue to outsource business to China because labor there is far cheaper than in the U.S.

The nation’s retailers are still very willing to sell products manufactured in China, but there is a catch. They require the companies responsible to have appropriate amounts of product liability insurance. Target, Wal-Mart, Kmart, McDonald’s and others will put products manufactured in China on their shelves as long as their manufacturers and importers have adequate coverage.

The problem for importers is that standard lines insurers are often fearful of potentially defective products—even if the risk may be small or miniscule. When fearful, they tend to decline coverage, and scares like melamine in China make them even more leery.

That’s where wholesale brokers and specialty lines markets come into the picture, often insuring items that others will not for whatever reason. Excess and surplus lines companies are able to offer specialty lines coverage largely because they are free of rate and form restrictions imposed on other insurance carriers. Because of this freedom, they are able to react to changes in the market and design a policy that meets the needs of both the insurer and the insured.

Finding the Best Match

Sounds simple. Can’t get standard lines insurance for a client’s product manufactured overseas or in a category that has been recently recalled, find a member of the specialty lines community that will take it. But finding the right carrier in the specialty lines community is not that easy. It takes skill, knowledge and experience.

This is where wholesale brokers can be of tremendous assistance. Wholesale brokers have a vast knowledge of E&S carriers and experience working with many of them. Thus, wholesale brokers can help match customers to the right carriers. How valuable are wholesale brokers? Well, companies like Markel work almost exclusively through them.

Ask Nan Meyer, product line leader for Markel. She finds a great deal of value in the business that comes our way through wholesale brokers. She particularly likes that the business is prescreened, and she knows the application for insurance will be complete before it reaches her desk or anyone else’s.

“For Markel, it’s easier because we are getting business that has already been vetted,” she says. “The wholesaler is not going to pass on a submission that says simply ‘machine parts’ or ‘herbals.’ Before he contacts us, he is going to know exactly what machine part or what herbal it is that needs to be insured, how it is being used in the product, etc. He just does a far better job of screening applications for proper information so that, once we get the risk, we know exactly where to go to place it.”

We have found that professional wholesale brokers provide complete information, and as a result we have few questions, if any, because the wholesaler has already asked them. We may have one or two more, but they are usually minor or a further clarification of something in the application. As underwriters, we really appreciate that all the legwork has been done for us so we can concentrate on writing the risk rather than determining whether it is for us.