A type of insurance broker who acts as an intermediary between
a retail broker and an insurer, while having no contact with the
insured. Wholesale agents place business brought to them by retail
agents. Unlike a retail broker, wholesale brokers have direct contact
with the insurer, whereas the retail agent who produced the business
does not. The same broker can function as a retailer or wholesaler,
depending on the specific situation.
Wholesale brokers often possess
specialized expertise in a particular line of coverage or in a line
of coverage that is unusual and/or have greater access to or influence
with certain insurance markets, which is especially valuable when
dealing with a difficult-to-place risk.
There are two types of wholesale
brokers: managing general agents and surplus lines brokers. The
latter work with the retail agent and the insurer to obtain coverage
for the insured; but unlike a managing general agent, a surplus
lines broker does not have binding authority from the insurer.
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PLI IV.J; TRR 5/2001