The W&I Market
Also in this section
So now we have considered the fundmentals of W&I insurance, it is worth talking about the W&I insurance market. This is how and where W&I insurance can be purchased.
Like almost all other types of insurance, W&I insurance has two key parties at its center: (i) brokers; and (ii) insurers. Insurance Brokers are the intermediatories who will advertise and sell W&I insurance policies to their clients. However, brokers aren't the actual providers of the insurance and they won't be paying out in the event there has to be a claim under the insurance policy. In simple terms, the brokers are not the companies putting their money on the line when a W&I insurance policy is bought.
As you can see from above, brokers and insurers sit at the center of the market at it is between the two parites that the W&I insurance policy orginates and is negotiated.
Insurers, often called underwriters, are the companies who will provide the insurance policy. They are the ones to assess the risk during the underwriting process, price the risks into the insurance premium and handle any claims that need to be made. These insurers can be large scale self-insuring companies (meaning their own money is on the line), or, more frequently, they are managing general agents of large insurance capacity providers (meaning they write insurance policies on behalf of multiple other companies).
Insurance capacity providers (often called insurance carriers) put down the money in the policy. For example, where a policy has a limit of libility of £5,000,000 it's an insurance carrier who will actually offer up this money in the event of a claim.
Insurance brokers work on behalf of their client who is usually the entity that becomes the named insured in the insurance policy. However, these clients might not have a direct relationship with the insurance broker. They might have been introduced to the broker via their law firm or an investment bank working on the transaction. If they have been introduced to the broker via a law firm, it is likely that the law firm will do most of the corresponding and negotiating with the broker rather than the ultimate client.