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How to Select a MGA/Wholesaler

July 18, 2005

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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