Definition - What does Coverholder mean?

A coverholder is a party that helps insurance companies write policies, collect premiums, and perform other duties in markets that are outside the insurance company's headquarters or normal territory. Coverholders play a key role in helping insurance companies expand their operations and reach new markets or regions.

Insuranceopedia explains Coverholder

Coverholders not only take some of the labor of expansion out of the insurer's hands, but they also bring an extensive knowledge of the local territory. This includes:

  • Market features
  • Local regulations
  • Competitors
  • Customer preferences

This expertise allows the insurer not only to expand but to improve the odds of engaging in a commercially viable expansion.

Coverholders, meanwhile, also benefit tremendously from partnering with steadily growing insurance companies. Helping them expand into new markets can be very profitable.

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