How Many Wholesale Brokers Does Your Agency Need?

We’re now in one of the most unique markets the insurance industry has ever seen. The hard market has persisted for years now, driven by catastrophe (CAT) losses, social inflation, supply chain issues, nuclear verdicts, reinsurance pressure, and more. Driven by the increased volatility in the market, agents and businesses are increasingly reliant on the surplus lines market. In fact, the Wholesale & Specialty Insurance Association (WSIA) reports that surplus lines premiums grew 10.1% in the first half of 2024 to $39.5 billion.

With this increased reliance on surplus lines markets comes an increased need for partnering with wholesale and surplus brokers. But how many wholesale brokers does your agency actually need? Let’s review five ways your retail agency can answer that question.

Factors to Consider

1. Specialized Risks Require Specialized Brokers
   If your agency deals with specialized risks – such as cyber liability, environmental insurance, or high-value homes – it’s crucial to work with brokers who have expertise in those areas. Specialized brokers are better equipped to understand the unique nuances of these risks and often have access to markets that other brokers do not.

2. Balancing Access and Overhead
   While having multiple broker partnerships can expand your access to various markets, it is essential to balance this with the administrative overhead. Managing relationships, keeping track of different workflows, and ensuring compliance with multiple brokers can be resource-intensive. Aim to maximize market options while minimizing complexity.

3. Quality Over Quantity
   It’s not just about the number of brokers you work with, but the quality of those relationships. Cultivating strong, collaborative partnerships with a few key brokers can often be more beneficial than spreading your efforts too thinly across many. Look for brokers who consistently deliver value, understand your agency’s needs, and are responsive to your inquiries.

4. Market Conditions and Flexibility
   The insurance market is dynamic, and conditions can change rapidly. Having a diverse broker network can provide flexibility and options when markets harden or new opportunities arise. However, be cautious of overcommitting to too many brokers, which can lead to inefficiencies and diluted focus.

5. More Than Just “Blocking the Market”
   A strategy of trying to block the market may help your agency in certain situations, but it can also lead to strained relationships with your broker partners. Is this a strategy that is in your clients’ best interests? Is it a strategy that is best utilizing your broker relationships? Thos are certainly questions that are up to the agent to decide. But partnerships go both ways, and your relationships will typically be strengthened when you are being up front about your market access needs.

Ideal Number of Broker Partnerships

There's no one-size-fits-all answer to the ideal number of broker partnerships. However, a good starting point for most independent agencies is to consistently work with around five wholesale brokers. This range allows for a diverse selection of coverage options while maintaining manageable relationships.

For agencies with highly specialized niches, you may need to adjust this number upwards to ensure adequate coverage for all areas of specialization. Conversely, smaller agencies or those with more generalized portfolios might find that fewer broker partnerships are sufficient.

In conclusion, the number of wholesale brokers your independent insurance agency should partner with depends on various factors, including the complexity of the risks you handle and the resources available for managing these relationships. By striking the right balance, you can enhance your market access, better serve your clients, and thrive even in challenging market conditions. Are you ready to add QuoteWell to your broker partnerships? Connect with our team of experts today to learn how we can help you build a strategic and efficient wholesale process that is tailored to your agency's unique needs.