Adapting to Change and Seizing Opportunities
Calvin Smith (pictured), the owner of Active Underwriters, believes that success in the wholesale brokerage industry hinges on the ability to adapt and remain agile. “As a wholesale broker, we must constantly navigate changes,” he explained to Insurance Business. “Market dynamics, economic fluctuations, and disruptions from catastrophes all impact us. It’s our responsibility to adapt and find solutions.”
Smith emphasizes that it’s not the magnitude of challenges but the ability to accommodate changes that defines success in this field. With insurers contending with reinsurance challenges and sometimes narrowing their underwriting appetites, brokers must act swiftly. “Our role is to identify and connect with markets willing to cover the business,” Smith said. “Staying informed about industry developments and engaging with fellow insurance professionals is essential for our success.”
Concerns in the Trucking Sector
An immediate concern for wholesale brokers is the impact of tariffs on cross-border trucking. On February 1, the U.S. government announced new tariffs on Canada, effective March 4. While the full impact is yet to be seen, many brokers are understandably worried. However, Smith remains cautiously optimistic for now. “Most of the truckers we work with are based in the U.S.,” he noted. “These tariffs may eventually affect the trucking industry, but the timeline is uncertain. If the U.S. sees fewer overseas shipments, it could slow things down, but the outcome is still unclear.”
Challenges in Securing Coverage
As the insurance market hardens, obtaining coverage for high-risk sectors like construction and trucking becomes increasingly challenging. Smith highlights the crucial role of wholesale brokers in bridging the gap left by direct carriers. “Retail agents find it harder to place business with their direct markets, which is where we step in,” he told Insurance Business. “Clients with specific coverage needs or trades deemed adverse by direct markets rely on us. Effective communication with retail agents and carriers is vital.”
The transportation sector, in particular, is becoming more complex. Smith points out that breaking out lines of business within a commercial auto package policy can help reduce premiums and minimize renewal increases.
Exploring New Opportunities
Beyond trucking and construction, Smith is open to expanding into specialized industries but remains strategic in identifying opportunities. “If you want to expand beyond your specialty, there should be a market for it,” he advised. “Running a small agency with a few employees, I rely on open communication with retail agents to identify areas where they need assistance and have difficulty placing business.”
“Competing firms may have numerous carriers writing the same class of business, but larger companies might overlook areas with growth potential,” Smith noted. “Strong communication with retail agents is essential.”
The Future of Wholesale Brokerage
Looking ahead, one thing is certain for wholesale brokers: change is constant. Technology will continue to innovate the sector, with increasing investments in generative AI. However, the extent to which generative AI should automate insurance processes remains a topic of debate. Research from Duck Creek Technologies shows that 44% of consumers prefer human interaction, up from 35% in 2022.
Smith isn’t ready to forgo the human touch in his firm. “We’re a mom-and-pop shop,” he stated. “Retailers appreciate this about us. In an era where everything is automated, retail agents may struggle to know who to contact for assistance. There’s the underwriter, accountant, auditor, and much can get lost in translation.”
“While some companies excel in automation, there’s a type of agent who prefers direct contact with their underwriter. That’s where we come in. However, I’m all for streamlining processes; I just haven’t found an automated system that delivers the service we aim to provide.”
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