Smaller independent agencies increasingly need to tap the excess and surplus lines market as clients’ risks become more complex. Wholesalers can open the door to those markets, but what they don’t take off the agency’s plate is the extra work E&S brings into businesses built around standard-market placements.
That work runs from collecting underwriting information to handling premium financing, according to Matt Masiello (pictured), CEO of SIAA, a national alliance of independent insurance agencies in the US.
“Independent agencies are going to stumble upon or identify complex needs that need to be met. I think there are two challenges they have to overcome,” Masiello told Insurance Business. “One is finding the market, but the other is the expertise to make sure they’re doing it right for themselves, for their client and for the market where it’s going to be written.”
SIAA provides its member agencies with wholesale relationships alongside admitted-carrier access, and runs its own internal wholesale team.
The Big “I” 2026 Market Share Report put surplus lines utilization in the independent agency channel at 9.9% in 2025, above the five-year average of 9.3%. The channel is dominated by small firms. The 2026 Agency Universe Study by the Big “I” and Future One counts approximately 37,000 independent agencies in the US.
For many agencies, finding a market for an unfamiliar risk means calling a wholesaler or MGA. The Big “I” and Future One’s 2024 Agency Universe Study found that 61% of agencies used wholesale brokers for commercial lines, up from 53% in 2022. Smaller agencies, however, have historically been less likely to use wholesalers than larger ones.
A generalist encountering an unfamiliar exposure can call a wholesale specialist for help assessing the placement. But even with a wholesaler involved, the retail agency still has to handle the parts of the placement that make it profitable, or not.
The first thing agencies underestimate, Masiello said, is the submission. An agent assembles a standard ACORD package with enough detail to quote through an admitted carrier’s portal, then learns the E&S underwriter needs more. “That’s now a friction point because they have to go back to the consumer or prospect to be insured and get that information,” he said.
Billing is the next adjustment. For smaller agencies, Masiello said, E&S is “agency-bill business.”
“Smaller and newer agencies need to understand the risks around minimum earned premiums,” he said. “They need to understand the risks around the fact that it is agency bill, and whether they have a financing relationship with no recourse to the agent.”
Technology can also take on some of that workload. SIAA’s internal wholesale team, for example, accepts emailed submissions that run through an AI engine, which reviews the material and returns suggested coverage forms and requests for missing information.
Read more: Agents are using AI. Their agencies mostly aren't – why?
Masiello said SIAA is also using AI and third-party data to help populate submissions. The aim is to get more complete information to underwriting and reduce repeated requests to the agent.
“It begins to compile a better submission to put in front of the underwriter at the wholesaler to help everybody do their job for the client, the agent, the wholesaler and the carrier,” he said.
Agencies can lean on wholesale expertise while building their own understanding of the risks they write. As they grow and move into more complex business, they tend to develop specializations and need broader market relationships.
Those niches might be high net worth, transportation, benefits or nonprofit. Agencies can start with specialties that fit their admitted carriers, but “the bigger and more complex those specializations get, the broader a group of markets you need,” said Masiello.
He sees opportunity for smaller agencies, especially as E&S carriers look to grow.
Read more: Changing carrier appetite keeps E&S central to the market: WSIA CEO
“Of around 37,000 independent agencies, 80% or 85% are small agencies with under $2 million in revenue,” Masiello said. “Markets — whether carriers, wholesalers or non-admitted carriers — have determined that, to continue growing premiums, those smaller, growing independent agencies are an important market to access.”
