Many reinsurers continue to use brokers to sell reinsurance to health maintenance organizations and stop-loss coverage to employers.
That can be a good way to sell HMO reinsurance or stop-loss coverage, but some reinsurers–the companies that are putting their capital on the line–may prefer to work with an intermediary that has a primary fiduciary responsibility to the reinsurer rather than to the client.
The typical managing underwriter is an independent contractor that has to cover its own operating expenses but works closely with a reinsurer and has an agreement that declares that its primary fiduciary responsibility is to serve the interests of the reinsurer.
Arrangements vary, but the typical managing underwriter also offers more services to the carrier than a typical broker might offer. Managing underwriter services could include everything from prospecting, selling and pricing to plan installation and plan servicing.
Here is a look at the factors that set a great managing underwriter apart from its competitors.
1. Underwriting skill.
Good managing underwriters should work closely with reinsurers to understand their underwriting philosophies and pricing guidelines, then work relatively independently within those guidelines. Some reinsurers review every risk submitted by a managing underwriter, while others give managing underwriters full binding authority and rely on audits and penalties to avoid unpleasant surprises.
2. Sensible compensation arrangements.