Forming the basis of mutual trust, from the agents' standpoint, is the knowledge that the MGA's goal is to work for the independent agent to find the best coverage for his or her client. For the MGA, trust is gained from knowing that the independent agent is telling the MGA everything about the account and filling out applications completely.

This trust is created in our everyday work and solidified when accounts are placed easily and effectively between the two parties.

The trust is cemented during quarterly reviews and audits, when they show that both parties have lived up to their individual commitments.

Trust will get both parties through the extremes of the market cycle, and points in between. In the soft market, trust is essential because the MGA must believe that the agent is trying to keep the business he or she currently has, and that the agent is not shopping everywhere for new business placements. The agent, in turn, needs to trust that the MGA is working as hard as he can to continually produce the correct coverage for his or her clients.

During the hard market, the MGA needs to trust that its independent agent clients will deliver everything the MGA needs to understand a risk, even as fast paced as this type of market can be. The agent needs to know that the MGA is doing everything he or she can to help the agent retain his or her client–the ultimate customer buying insurance.

Trust cannot be established or maintained by either party if effective communication is absent from the relationship. While trust is important, there's no need for blind trust. In other words, communications should be delivered in written form as much as possible, and should always spell out the expectations of both parties.

The MGA needs to let the agent know exactly how his or her firm conducts business, and that the MGA will live up to all expectations that are set. The agent, by the same token, needs to let the MGA know what he expects, and that the agent will also live up to the MGA's expectations.

When there are issues, they should immediately be addressed. Both parties should know what is going to occur, who will take care of something, and when.

In the soft market, essential information communicated from the agent to the MGA will let the MGA know where the agent has attempted to place the business. This communication will allow the MGA and the agent to get the best coverage for the client. Such communication is just as vital in a hard market, when exact information about coverage needs, and about the timeframe in which a quote is needed, are critical messages to convey.

The most important part of the agent-wholesaler relationship is the accountability–more precisely, mutual accountability–supporting the belief that both parties will live up to their expectations. The agent must always pay bills on time and respond back to the MGA in a timely fashion on any questions. The MGA, in turn, must not just set service standards but also deliver on them–and deliver on proposal offers they have given out.

Building trust is hard work. Therefore, agents and MGAs should both avoid certain pitfalls that can tear down that trust in a heartbeat.

For example, agents shouldn't flood the market with duplicate submissions. MGAs and wholesalers that work diligently to try to place a risk for an agent, only to find that their insurance company markets have received the same information from a dozen other MGAs, are unlikely to want to continue to work with that agent.

Agents who try to coax wholesalers to “tie-up” markets, sending submissions to all possible insurers in efforts to block other independent agents from placing a piece of business, also won't win friends among MGAs and wholesalers.

Such dubious practices don't just cast doubt on the trustworthiness of the retailers involved. They also work to undermine the well-guarded and highly priced relationships that wholesalers and MGAs have with their insurance company markets–markets that expect their wholesale partners to thoroughly understand their appetites and to deliver business that fits within their guidelines.

Other don'ts for agents:

o Don't drop the ball once the risk is bound.

o Don't advance the premium.

o Don't sign the application for the insured.

o Don't submit different sets of data.

One way agents “drop the ball” is when they fail to provide necessary data.

There are times when risks are bound, but there is still data needed. It is vitally important to get this data in a timely fashion for a couple of reasons.

First, the absence of data could jeopardize coverage for the insured. We always want to have the best, most complete coverage for our insureds.

It could also impact premium. The premium may change if the data we need is not received and certain information about the risk cannot be confirmed.

This goes directly back to expectations. Trust is broken when an MGA has to tirelessly go back to the agent, or the agent has to continuously go back to the MGA, with respect to data requests.

MGAs should also practice what they preach–paying attention to their relationships with independent agents and avoiding some common relationship busters.

For example, MGAs shouldn't play independent agents against each other.

There are two ways to handle potential problems here.

One is to have a very strong agent-of-record letter policy. The MGA discloses that if he gets a proposal from one agent, then he will not quote another unless there is an agent-of-record letter within a certain amount of time before the expiration date. The MGA should allow a rescinding letter from the other agent.

The second is by stating that quotes will be given out to all agents with proposals equal to each other, requiring the agents to sell the account on the basis of their service and professionalism.

Another activity for MGAs and wholesalers to steer clear of is “double- brokering” accounts. In other words, the MGA should let the independent agent know if he could go direct to a particular market–and show him how.

While double-brokering is not illegal and doesn't hurt the client, my personal feeling is it is moving the process one to many steps. And it goes back to the idea of relationship building and keeping open the lines of effective communication between the MGA and the retail agent.

Showing the independent agent how to access the market directly creates the confidence that the MGA is working to help that agent.

MGAs demonstrate their professionalism by giving partners reasons to trust them, and by always holding themselves accountable to serve their agent and insurance company partners. Independent agents demonstrate their professionalism in the exact same way.

Francis G. Johnson is the president of Johnson & Johnson Inc. Mgrs, a managing general agency based in Charleston, S.C. Mr. Johnson, who is also incoming president of the American Association of Managing General Agents, can be reached at fgjjins.com. The AAMGA is an international trade association representing over 490 managing general agencies, insurance companies and related entities in the wholesale insurance marketplace, employing over 8,000 insurance professionals in all 50 states.