The following is a guideline for some of the key things to review during the selection process for qualified alternative markets. The term MGA also applies to GA, MGU, wholesaler, E&S broker, etc.
Step One — Seek Out the Experts
Does the market have a thorough understanding of the products that are needed?
Is the MGA/wholesaler capable of explaining and interpreting the coverage and benefits of these products?
Are they creative at developing solutions for the insured’s needs?
Do they have more than one individual that can answer questions?
Step Two — Research the Background
Ask other agents about their experience with the wholesaler.
Find out about the history of the firm, who owns them and how long they have been in business.
During your first contact with the firm note how easy or difficult it is to do business with them.
Do they return telephone calls?
Step Three — Are They Professionals?
What is their level of automation?
What is the typical response time after a submission is made?
Do they require an agency contract? If so, is it restrictive?
Do they have volume requirements?
Do they have adequate E&O coverage for what they are doing?
Step Three — Product Quality
Which markets do they represent?
Are the markets admitted or nonadmitted?
Are these markets financially stable and what is their rating?
How much business does the wholesaler write with these markets and how long have they had their relationship?
What is the MGA’s loss ratio with these markets?
What alternative markets exist, if any?
Step Four — Knowing the Process
What is the MGA’s philosophy on marketing business?
How are broker-of-record letters handled?
How many markets are typically approached?
If more than one retail agent submits the risk, how is it determined which agent receives the quote?
What commission level do they normally pay? Is it negotiable?
Do they charge brokerage fees?
Discuss the procedure for regulatory filing and surplus lines taxes.
Is the tax included in the premium? Is it a separate fee or does the agency pay for it?
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