14.2.2 Relationship of Insurance Producers.

• Jurisdiction: Arizona

14.2.2 Relationship of Insurance Producers. Insurance producers may function differently, depending on whether they are acting as captive, independent or wholesale insurance producers. “Captive” insurance producers work exclusively for one insurer or group of insurers, owe their allegiance to their employers, and are permitted only to sell their employer’s policies to customers.¹⁹ However, “independent” insurance producers may instead search the market for policies and companies best suited to the client’s needs.²⁰ Captive and independent producers are typically referred to as “agents.”²¹ They are generally said to be in a “retail” relationship with consumers, in the sense that they have direct contact with customers at the point of sale.²²

In contrast, “wholesale” insurance producers act as intermediaries between retail insurance producers and insurers, usually with no direct customer contact.²³ Such wholesale producers are often referred to as “brokers.”²⁴ They generally have relationships with insurers that cannot be accessed directly by retail producers.²⁵ A common example illustrating this “chain” of producer relationships involves an insured seeking to procure hard-to-place coverage through a retail insurance producer who has no available sources for such coverage.²⁶ The retail producer then contacts a wholesale insurance broker who arranges placement with a specialty “surplus lines” insurer that in turn provides coverage not...