Insurance clusters for new agents can give you a better way to start your new independent agency off on the right foot. When you leave the Liberty Mutual independent agents, you lose a lot of support that you’re used to having as an agency owner. Even though you’re an experienced agent, you’re still out there fully on your own. So, how can you get the best possible head start to grow your book of business? By determining whether you should join an insurance cluster.
In this article, you’ll learn about:
- What an insurance cluster is
- The benefits for independent agents who join an insurance cluster
- What you should ask before you join a cluster
We know you’ll learn a lot about whether you should join a cluster. To help you decide, we’ve created a free workbook for you to download. You can grab your copy here.
Insurance Clusters for New Agents: What Are They?
Insurance clusters are also known as network aggregators or insurance alliances. They are formal alliances of independent agencies that work together to provide the members with support and various benefits. These insurance clusters accept new agents and experienced agents. SIAA is an example of an insurance cluster that accepts new agents that provides multiple benefits for its members.
Benefits of Joining an Insurance Aggregator for an Independent Insurance Agent
Experienced agents who are involved in an insurance aggregator know one thing: there’s strength in numbers. When you were part of Liberty Mutual’s independent agents program, you relied on their program for help. Liberty Mutual is a big insurance company. Now that you’re truly independent, you’re on your own. It's difficult to get appointments from insurance carriers. It isn’t always easy to grow your book of business alone. There are several benefits of joining the right insurance cluster.
Access to More Insurance Carriers
As a new independent insurance agent, you’re gaining access to more insurance carriers, which expands your ability to provide clients with more insurance products. Offering more products to your clients means that you have the potential to improve your profits as well as grow your book of business. Happy clients refer to friends and family!
Support with Software Licensing
The right insurance cluster helps insurance agencies like yours negotiate software licensing fees for necessary technology, such as for your agency management systems, customer service needs, and other expenses. Because your independent agency is now part of a larger group, it’s easier to negotiate prices as a group and lower the prices for all the members.
New Networking Opportunities
Clusters give you access to other agency owners and independent insurance agents. We’re talking about mentors, friends, and advice! So, if you’re looking for information about how to improve how your agency operates, you can find someone to talk with. If you’re looking for the opportunity to buy, sell, or merge your independent agency, you can get the right advice at the right time… and you might just meet the right agency owner within the insurance cluster!
More Ways to Earn
You join in on profit sharing. Some insurance aggregators, such as SIAA, provide agency owners with profit sharing abilities.
Are There Downsides to Joining an Insurance Cluster as a New Agent?
When you’re a new agent, the first thing to consider is whether the insurance cluster is a right fit for you. Can you or do you get along with the other independent insurance agents within the cluster? Personality is a big deal. If you don’t like the other agents in the insurance cluster, you’re not likely to get or remain involved.
If an insurance carrier has a problem with the insurance cluster you’ve joined, the appointment could be lost. So, be careful when you’re doing your research into which insurance clusters you’re considering. Are those clusters you’re interested in staying out of trouble in the industry? Are they gaining access to the right carriers?
Read the contract from the cluster. What sort of fees are there? Can you live with those fees? Some fees that might be present include:
- Initiation fees
- Maintenance fees
- Monthly fees
- Exit fees
Maybe you decide those fees are worth it and maybe you decide they aren’t.
Some insurance clusters have a production requirement. It’s important as an agency owner that you thoroughly read the contract so that you know what’s expected of you as a member. If there’s a production requirement, you would need to fulfill that requirement along with any requirements you already have with your insurance carriers.
What to Ask Yourself Before You Join an Insurance Cluster
You’ve learned about the benefits of joining insurance clusters for new agents and the disadvantages. While those are important, you should also get answers to some important questions. There are questions you need to ask yourself to determine what’s really important to you. There are also questions that the insurance cluster should be able to answer for you as well. The answers they have for you will help you decide whether or not to join.
What to Ask Yourself Before You Join a Cluster
Before you join a cluster, ask yourself the following questions and answer them honestly to decide if the insurance clusters you’re interested in are right for you.
- Do you know all the fees involved and are you ready to fulfill them? Yes, you should be able to make more money once you join the cluster, but you must also understand and be able to pay the fees. Make sure that you can live with the fees that you’re obliged to pay as a member.
- If there are production requirements, can you meet them? There could be several factors that determine whether you’re able to meet the production requirements set by the insurance cluster. So, review it carefully and answer this question honestly before you join.
- What is necessary to join? Insurance clusters operate differently from each other. Make sure you understand what you need to do to join and to remain a member of good standing. Some cluster groups require independent agency members to combine their book of business with the cluster. Others may require that they change the name of their agency. So, find out exactly what is necessary to join and if you’re okay with doing it.
- Does the insurance cluster operate where you do business? Most insurance clusters are regional. It’s better to choose an insurance cluster that has a wider net than one that does business in fewer areas. This could be a beneficial business move in the future should you choose to expand your business operations or even move your independent agency in the future.
- Does the cluster provide you with access to insurance carriers and products you can’t access on your own? Also, out of those products, can you write those lines of business? Knowing the answers can help you grow your book of business.
- Can you get other types of support that you want and need? Examples may include classes or mentoring in marketing, discounts on technology such as for agency management systems, and guidance on compliance matters.
- Do you have the right to take your book of business with you if you decide to leave the insurance cluster? Make sure you know what happens if you decide to leave in the future.
What to Ask the Insurance Cluster Before You Sign the Agreement
Before you sign the insurance cluster agreement that makes you a member, read the agreement carefully and get answers to questions you have. Hopefully, the following questions are a good starting point.
- How is the insurance cluster structured? You want to know if it is loose and flexible or if there is a more formal structure with shared services and expenses. They both operate in different manners.
- How are the company contracts held and who holds them? If you need to get a copy of the contract (and you can’t find yours), you need to know how to do it. Having this information up front is beneficial, especially since joining an insurance cluster is a business arrangement.
- Who collects premiums from the cluster members and where is the trust account located? Who manages the trust account? This is a question that you’ll want to make sure you have answered every so often if you join so that you always have updated information.
- How much management control of the independent insurance agency does the cluster have? Keep in mind that you became an independent agent for a reason: to have control of your own agency. So, make sure that you’re happy with the answer.
- What is the process the cluster uses to admit new agents? For example, new agents are treated the same as founding members in some cluster groups. In other cluster groups, they do not receive the same benefits.
- When an agent wants to leave the cluster, what is the process like? Sometimes, the entire cluster is affected. Sometimes the agent leaving will lose all or some of their book of business. There could be an exit fee.
- Is it a requirement to sign a non-compete agreement? If so, you need to read the non-compete agreement carefully.
- What is the expense to run the insurance cluster and how are agency members charged to be part of it? Understanding how the cluster charges is important if you’re going to be part of it.
- Are you required to provide your own E&O policy or will the insurance cluster provide one that covers the members and their insurance agencies?
Remember, the questions above are a great place to start. Review the websites of the insurance clusters you’re interested in joining. Make a list of questions that you want answered. Get the answers before you join. You don’t want any surprises after you join.
Get Ready to Grow Your Agency with the Right Insurance Cluster!
We hope you’ve taken a lot of great information from this article. Insurance clusters for new agents can definitely be a better way to get a head start for your new independent agency. But when you’re looking to join an insurance cluster, it’s imperative to choose the one that’s best for your agency. To help you along the way, we’ve prepared a free workbook to help you make this decision. Get your copy here!