Calvin Smith, the owner of Active Underwriters, believes that success in the wholesale brokerage business hinges on the ability to adapt to change. In a recent interview, Smith discussed the challenges that wholesale brokers face, emphasizing the need for agility in a fluctuating market.
"As a wholesale broker, we often encounter changes," Smith explained. He noted that shifts in the economy and unexpected events can significantly impact their operations. With insurers grappling with reinsurance issues and tightening their underwriting criteria, brokers must respond swiftly to these developments.
One pressing concern for brokers is the recent introduction of tariffs on cross-border trucking. On February 1, 2025, the U.S. government announced new tariffs on Canada, set to take effect on March 4. While the full impact of these tariffs remains uncertain, many in the industry are understandably anxious. Smith, however, maintains a cautious optimism. "Most of the truckers we work with are based in the U.S.," he said. "While these tariffs could affect the trucking industry, it’s still unclear how quickly that will happen."
As the insurance landscape becomes more competitive, obtaining coverage for high-risk sectors like construction and trucking is becoming increasingly challenging. Smith pointed out that wholesale brokers play a crucial role in bridging the gap left by direct insurance carriers. "Retail agents are finding it harder to place business with their direct markets, and that’s where we step in," he said.
Smith highlighted the growing complexity in the transportation sector, particularly regarding insurance policies. He noted that separating different lines of business within a commercial auto package could help reduce premiums and mitigate significant increases during renewals.
Looking to the future, Smith is open to expanding into specialized industries but is strategic about identifying opportunities. "If you want to branch out beyond your specialty, there should be a market for it," he advised. He emphasized the importance of communication with retail agents to understand their needs and challenges.
Smith also acknowledged the competitive nature of the industry, where larger firms may overlook growth opportunities. "We’re a small agency, and that allows us to focus on areas that might be missed by bigger companies," he said.
As technology continues to evolve, Smith recognizes the challenges and opportunities it brings. He noted that while many businesses are investing in automation and generative AI, there remains a strong preference among consumers for human interaction. "I know there are companies that automate well, but many agents still prefer to speak directly with their underwriters," Smith said.
In a world increasingly driven by automation, Smith is committed to maintaining a personal touch in his business. "We’re a mom-and-pop shop," he stated. "Retailers appreciate that about us. In a time where everything is automated, having someone to talk to can make a difference."
As the wholesale brokerage industry continues to face changes, one thing is clear: adaptability and communication will be key to navigating the evolving landscape.