HOW TO INSURE WHOLESALERS & DISTRIBUTORS:

• The Product May Only Be Passing Through.
• The Liability May Not Be.

A Producer's Practical Guide to Understanding, Insuring & Winning Wholesale & Distribution Accounts.
A prospect says:
“We don't manufacture anything. We're just the distributor.”
That word--just—should get your attention.

• What do they distribute?
• Where do the products come from?
• Domestic manufacturers?
• Foreign manufacturers?
• Do they import directly?
• Do they private-label anything?
• Do they repackage products?
• Modify them?
• Assemble them?
• Provide instructions?
• Who buys from them?
• Retailers?
• Contractors?
• Manufacturers?
• Consumers?
• Where is the inventory stored?
• How much inventory is there?
• How much can accumulate during peak periods?
• Who delivers it?
• What happens if the product injures someone after it leaves the warehouse?
• What happens if a supplier cannot replace inventory after a major loss?

The product may pass through the distributor's warehouse.
The exposure may follow it much farther.

WHAT'S INSIDE?
Follow the Product.
One of the easiest ways to understand a distributor is to follow a product from beginning to end.
Product Discovery:
Start with:
“Tell me exactly what you distribute.”
Then:

• Who makes it?
• Where?
• Who buys it?
• What does the distributor do with it?
• How is it transported?
• Where is it stored?

Don't settle for:
“General merchandise.”
The product matters.
Suppliers:

• Who supplies the merchandise?
• Does the distributor depend heavily on one supplier?
• Are there alternatives?
• How quickly can products be replaced?

A distributor's business may depend on companies hundreds or thousands of miles away.
Imports:
“Some of our products come from overseas.”
Ask another question.

• Who imports them?
• Who is the importer of record?
• What country produces them?
• Who is the manufacturer?
• What agreements exist?

Importing can change the liability conversation substantially.
Private Labeling:

• Does the distributor put its own name or brand on products made by somebody else?
• That fact deserves careful attention.
• The customer may see the distributor's name—not the manufacturer's.

Repackaging, Assembly & Modification:
“We don't manufacture anything” doesn't necessarily mean:
“We don't touch the product.”
Does the distributor:

• Repackage it?
• Combine products?
• Assemble components?
• Modify anything?
• Apply labels?
• Provide instructions?

Each additional activity can change the nature of the risk.
Products Liability:

• The distributor may not have made the product.
• But if somebody is injured, the distributor may still become part of the claim.
• The producer should understand the product, its intended use, customers, contracts, and distribution chain.

Product Recall:

• A product problem doesn't always begin with an injury.
• Sometimes thousands of products must be located, withdrawn, replaced, or destroyed.
• Traditional liability insurance and specialized recall protection are not necessarily the same thing.
• The producer should recognize when another conversation is needed.

Warehouse Property:

• Racks.
• Shelving.
• Forklifts.
• Equipment.
• Computers.
• Office property.
• Inventory.
• Packaging materials.

A warehouse that looks simple from outside may contain millions of dollars of property.
Inventory:

• How much inventory is normally on hand?
• What is the maximum?
• Does it fluctuate seasonally?
• Is any inventory stored elsewhere?
• Does the insured hold property belonging to others?
• The producer needs more than an average number.

Seasonal Peaks:

• Suppose normal inventory is $500,000.
• But for three months each year it rises to $1.2 million.
• Which number matters on the day of the fire?

The inventory conversation needs to account for peaks—not merely averages.
Storage:

• How is merchandise stored?
• Floor storage?
• Racking?
• How high?
• What type of commodities?
• How are aisles maintained?
• What fire protection exists?

Warehouse characteristics can materially affect underwriting.
Forklifts & Material Handling:
Forklifts are common.
That doesn't make them insignificant.

• Who operates them?
• What training exists?
• Where are they used?
• What employee and property exposures do they create?

Transit & Cargo:
The inventory doesn't teleport from supplier to warehouse or warehouse to customer.

• Who transports it?
• Who owns it while in transit?
• When does ownership transfer?
• What contractual responsibilities exist?

Goods in motion deserve their own questions.
Delivery Operations:

• Does the distributor own trucks?
• Use employees' vehicles?
• Hire motor carriers?
• Make local deliveries?
• Operate larger trucks?

Transportation can turn a warehouse account into a significant commercial-auto exposure.
Business Income:
What happens after a warehouse fire?

• The building can be repaired.
• Inventory can theoretically be replaced.
• But how long will that take?
• Will customers wait?
• Can the distributor operate somewhere else?

A distributor without product may have very little business to distribute.
Supply-Chain Exposure:

• What if the distributor's building is perfectly fine—but its critical supplier burns?
• Or a major supplier stops operating?
• Or transportation is interrupted?

The loss doesn't always have to happen at the insured's premises to create a business problem.
Workers' Compensation:
Warehouse employees may:

• Operate forklifts.
• Move pallets.
• Lift merchandise.
• Load trucks.
• Climb.
• Work around racks.
• Use machinery.
• Drive vehicles.

Understanding what employees actually do is essential.
Crime:

• Inventory can disappear.
• So can money.
• The producer should investigate theft controls, employee access, financial procedures, and other crime exposures.

Cyber:
Modern distributors may rely on:

• Inventory-management systems.
• Electronic ordering.
• Customer databases.
• Supplier systems.
• Payment processing.
• Shipping systems.

A cyber event can interrupt the movement of physical products.
Umbrella & Excess Liability:

• Products, automobiles, warehouses, and other operations may create reasons to discuss additional liability limits.

The Underwriter Submission:
Don't send:
“Wholesaler — $5 million sales — please quote.”
Explain:

• What they distribute.
• Where it comes from.
• Who buys it.
• Whether products are imported.
• Whether anything is private-labeled.
• Whether products are modified or assembled.
• Inventory values.
• Warehouse characteristics.
• Transportation.
• Loss controls.

Tell the story of the product from arrival to delivery.
Proposal Comparison:
Two proposals with similar premiums can provide very different protection.
Help the client compare:

• Property limits.
• Inventory valuation.
• Business income.
• Products liability.
• Cargo.
• Commercial Auto.
• Crime.
• Cyber.
• Deductibles.
• Endorsements.
• Exclusions.
• And other important terms.

 Renewals:

•  Distributors change.
• New products.
• New suppliers.
• New countries.
• Higher inventory.
• Additional warehouses.
• New vehicles.
• Private-label products.
• Different customers.
• Higher sales.

A strong renewal follows the product again, rather than assuming last year's operation still exists.

• ​​$25.
• One-Time Purchase.
• A Resource You Can Keep Using.

GET THE WHOLESALERS & DISTRIBUTORS GUIDE →

THE PROBLEM WITH “WE'RE JUST THE DISTRIBUTOR” Consider two wholesalers occupying identical 25,000-square-foot warehouses.

• One distributes paper products manufactured in the United States.
• The other imports electrical components from overseas.
• Another distributes food products requiring refrigeration.
• Another handles industrial equipment.
• Another sells building materials.
• Another distributes children's products.
• Another private-labels imported merchandise under its own name.

Same type of building?
Perhaps.
Same risk?
Not even close.
The producer needs to understand three things:

• What comes in.
• What happens while it's there.
• What goes out.

Everything between those three points helps define the account.

WHO SHOULD HAVE THIS MANUAL? 
How to Insure Wholesalers & Distributors was created for:

• New commercial-lines producers
• Personal-lines producers moving into commercial insurance
• Producers encountering warehouse and distribution accounts
• Experienced producers looking for larger commercial opportunities
• Agency owners training commercial-lines staff
• CSRs and account managers servicing distributors
• Independent agents who want to understand product-driven commercial risks

You don't have to understand international logistics.
You do need to know enough to ask:

• What is the product?
• Where did it come from?
• What do you do to it?
• Where does it go?
• And what responsibility could follow it after it leaves?

​WHAT THIS MANUAL WILL HELP YOU DO:
After working through this guide, a producer should be better prepared to:

• ✓ Conduct a professional wholesale/distribution discovery conversation
• ✓ Understand exactly what products are being distributed
• ✓ Identify the source of products
• ✓ Investigate domestic and foreign suppliers
• ✓ Recognize importing exposures
• ✓ Ask about private-label products
• ✓ Identify repackaging, assembly and modification operations
• ✓ Understand warehouse and inventory exposures
• ✓ Investigate seasonal inventory fluctuations
• ✓ Recognize products-liability concerns
• ✓ Explore product-recall exposures
• ✓ Identify cargo and transit exposures
• ✓ Investigate owned, hired and non-owned vehicles
• ✓ Recognize forklift and warehouse employee exposures
• ✓ Explore business-income and supply-chain concerns
• ✓ Identify cyber and crime exposures
• ✓ Prepare stronger underwriting submissions
• ✓ Compare proposals beyond premium alone
• ✓ Conduct stronger renewal conversations
• ✓ Prospect for wholesale and distribution accounts more intelligently

REAL-WORLD PRODUCER THINKING

• The distributor says:
• “We import a few items ourselves.”
• Ask another question.
• “Some products carry our own brand.”
• Ask another question.
• “We assemble a couple of components before shipping.”
• Ask another question.
• “Our inventory almost doubles before the holidays.”
• Ask another question.
• “About 70% of our merchandise comes from one supplier.”
• Definitely ask another question.

Throughout the manual, practical situations help producers develop the habit of:
HEAR IT

• What did the distributor actually tell you?

ASK ABOUT IT

• What additional information does that create?

VERIFY IT

• What needs to be confirmed?

DOCUMENT IT

• What belongs in the agency file?

TAKE THE NEXT SAFE ACTION

• What should the producer do next without exceeding their authority?

One sentence can completely change the account.
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DON'T WAIT FOR DISTRIBUTORS TO FIND YOU. Wholesalers and distributors may be less visible than restaurants and retail stores.
That doesn't make them difficult to find.
Look at:

• Industrial parks.
• Warehouse districts.
• Business directories.
• Chambers of commerce.
• Trade associations.
• Economic-development directories.
• Supplier directories.
• LinkedIn.
• Commercial real-estate listings.

You'll find companies distributing products you never realized moved through your community.
And these accounts can be substantial.
Stop driving past warehouses without wondering what is inside them.
That curiosity is how commercial producers develop niches.

YOUR 30-DAY WHOLESALE & DISTRIBUTION PROSPECTING PLAN:

• Identify distributors in your market.
• Build a list of 20.
• Visit their websites.
• Learn what they distribute.
• Look for:
• Products.
• Suppliers.
• Markets served.
• Warehouses.
• Delivery operations.
• Multiple locations.
• Importing.
• Private brands.

Then identify carriers, MGAs, and wholesalers interested in those classes.
Learn their appetites.
Begin conversations.
Don't start with:
“Can I quote your insurance?”
Start with:
“I'd like to understand how your distribution operation works.”

• Learn something from every prospect.
• Follow up.
• Become knowledgeable.

The more distributors you understand, the easier the next one becomes.
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WHAT COULD ONE DISTRIBUTION CLIENT BE WORTH?
A wholesale/distribution relationship could potentially involve:

• Commercial Property
• Inventory
• General Liability
• Products Liability
• Business Income & Extra Expense
• Inland Marine
• Cargo
• Commercial Auto
• Workers' Compensation
• Product Recall
• Crime
• Cyber Liability
• Equipment Breakdown
• Umbrella or Excess Liability
• Other specialized protection

And distributors can grow quickly.

• More inventory.
• More warehouses.
• More trucks.
• More employees.
• More products.
• More territory.
• More sales.

One warehouse may contain the beginning of a very large commercial relationship.
THE ENTIRE MANUAL IS ONLY $ 25.

• Buy It Once.
• Use It From Now On.
• No monthly subscription.
• No expensive seminar.
• No travel.

Just practical producer development you can return to whenever a wholesale or distribution prospect asks your agency for help.

HOW TO INSURE WHOLESALERS & DISTRIBUTORS

• Digital Producer Guide
• $25 — One-Time Purchase
• Immediate Access

GET HOW TO INSURE WHOLESALERS & DISTRIBUTORS →

COULD ONE ACCOUNT PAY FOR THE MANUAL?
You're investing $25 to become better prepared for the next distributor that asks your agency for help.

• One property policy could pay for it.
• One Commercial Auto policy could pay for it.
• One Workers' Compensation policy could pay for it.
• One Products Liability exposure you remember to investigate could justify the investment.
• One distributor with several warehouses could pay for it many times over.

YOU'VE REACHED THE END OF THE COMMERCIAL LINES LIBRARY.
But hopefully not the end of the producer's learning.
The How to Insure Commercial Lines Library now includes:
1. How to Insure Contractors
2. How to Insure Restaurants
3. How to Insure Trucking & Transportation
4. How to Insure Churches & Religious Organizations
5. How to Insure Small Manufacturers
6. How to Insure Auto Repair Shops
7. How to Insure Retail Stores
8. How to Insure Habitational Properties
9. How to Insure Professional Offices
10. How to Insure Wholesalers & Distributors
Ten Businesses.Ten Different Sets of Exposures.One Producer Skill That Connects Them All:
KNOW WHAT TO ASK NEXT. 

FYI EXPRESS+
Practical Training. Better Producers. Stronger Agencies.

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