Independent insurance agencies can really benefit from joining an insurance cluster — you immediately gain bargaining clout with insurance companies, and there are many added benefits you gain from the structure and support of a cluster group.
Joining a cluster (or sometimes called an agency group or agency network) is a big business decision, and it’s important that independent insurance agents find the cluster that best fits their goals, methods, and style. The best insurance cluster group is the one that is better aligned with your specific goals, values, and strengths, while also helping you overcome your weaknesses.
Let’s go over some basics, such as the most desirable features, the pros and cons of joining, and a checklist to ask yourself before joining a cluster group.
What the best insurance groups have in common
- Access to many carriers: The insurance industry can be very hard for independent insurance agents, but the best insurance cluster groups will instantly allow you to gain access to many carriers you would not have been able to work with otherwise.
- Commissions and profit-sharing: The best insurance cluster groups use their clout to negotiate better deals with carriers to increase the percentage of your commission, offer profit-sharing, and even provide yearly or quarterly bonuses. In exchange, these groups are often set up to earn a percentage of your commission.
- More market access: The best insurance cluster groups give independent insurance agents access to more markets, including specialty and niche markets, as well as programs to fix the classes of business you are targeting.
- Discounts on tools: The best insurance aggregator gives you access to discounts and free trials of helpful software tools, such as comparative rating software and agency management software.
- Expert advice and support: The cluster chosen by an independent insurance agent should want you to grow and enable you to do so with advice and consultation on how to run and grow your business. You want to look for a group that has extensive experience doing what you do: selling insurance and owning/managing an agency.
- Education and training: An insurance cluster group that is invested in making its members succeed will offer access to professional training (such as CE) as well as informal training in the shape of webinars, online courses, blogs, and more.
- Access to mergers and acquisitions: If you have ever contemplated growing your business through M&A, being part of a cluster will give you lots of great information on potential business partners, and you will network with other insurance agents who may contemplate the same thing.
What should you know as an independent insurance agent before you join?
Don’t go joining the first insurance cluster you find, or the one with the most carriers. Do your research, and at the very least find the answers to these questions before you make your decision. That is the way you will choose the best insurance cluster group for your needs.
What are the requirements to join?
Maybe you think you found the best insurance cluster group, but they only accept agencies with certain premium volumes. Make sure you are qualified to join before you spend a lot of time researching an insurance cluster.
How much will it cost?
Get a clear understanding of all the fees that come along with the cool discounts and bonuses, so you can decide if it is indeed a winning proposition.
Some groups charge an upfront start-up fee. Often there are monthly fees and some groups charge maintenance fees, as well as ongoing commission sharing.
What happens if you want to leave?
Before joining, get a crystal clear understanding of how much it will cost, in the form of an exit fee, and how much time it will take to have your policies released if you decide to leave for whatever reason. Also, find out if there is a non-compete clause, which might make it difficult to keep working after leaving.
Will you have to share your book of business?
Some clusters will take over a percentage of your book, while others will allow you to keep full ownership. Ask and make your decision with the information you get.
Joining an insurance cluster group can really help independent insurance agents reach their insurance goals. Just do your research, choose carefully, and get to work!