Part 4, Fees: Should I Join An Insurance Aggregator or Agency Network?

Many independent insurance agents, both new to the industry and established agents, at some point find themselves asking the question: “Should I join an aggregator or agency network?” Independent agents aren’t tied down by the restrictive contracts and obligations that captive agents are – but they face their own set of challenges as an independent business owner. This ongoing blog series investigates both benefits and drawbacks of agency groups.

Drawback #1: Membership fees
Agency networks exist because there are many insurance agents who need access to markets for their customers. The networks provide a service, and have to be compensated in some way to make money and stay in business. Therefore, they charge fees to the agency owner in exchange for access to markets. For an agency owner who’s just starting out in the industry and needs markets, but has little profit and cash-flow, this can be a problem. Agency networks typically charge fees in one of three ways: Monthly membership fees, initial start-up fees, or commission splits.

Some agency networks charge agency owners fees in MORE than one way, requiring a start-up fee, a monthly fee, AND a commission split on business written through their program. While others only charge a commission split. The commission split charge in some networks is taken on income earned through the carriers the agent accesses through the group, and/or on the commissions agents earn on the carriers with whom they have a direct appointment.The agency owner must investigate the contract of each agency network, and decide which network offers them the best markets for the littlest cost.

Independent Insurance Agents Can Find Buying Power in Numbers

International  business team
International business team

Independent Insurance Agents Can Find Buying Power in Numbers
By: Michael Miller, Smart Choice® State Director

Whether you’re just starting your own agency or expanding into a new market, buying power will determine the insurance carriers who will work with you. Joining a cluster group is an easy way to get appointments with the industry’s top carriers.

It’s Tough Going It Alone

Whether you’re newly independent or a seasoned insurance agent, you’ve got a lot of work to do. When your efforts are stretched between marketing, making quotes, signing new clients, and managing your staff, pursuing new carrier appointments can seem impossible.

As a small agency, it’s difficult to get your foot in the door with the nation’s top carriers or meet the profit sharing minimums many carriers require. Savvy agents know they have more buying power when they join forces with other independent agents. That’s why many agents join cluster groups.

Power in Numbers

Cluster groups are able to pool the buying power of their members to make their insurance agents look more desirable to carriers. Instead of looking at the performance of one independent agent, carriers look at the performance of the entire group. Often, cluster groups already have relationships with the industry’s top carriers, so becoming a member can get you nearly immediate access to appointments.

Getting Paid

Joining a cluster group also gives you the power to bargain for better commissions. Commissions vary across markets and carriers, but generally, a cluster group will help you negotiate higher commissions.

Cluster group members also take advantage of a larger share of profit sharing. When you join a cluster group, profit sharing increases because your share is based on the performance of the group, not your individual agency.