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.
3 Key Considerations When Choosing a New Agency Management System
By: Michael Miller, Smart Choice® State Director
There comes a point in the life cycle of every insurance agency when it’s time to grow or die. It sounds harsh, but without investing in the right tools, there comes a point when it’s no longer possible to keep your agency growing.
Successful insurance agencies recognize the value of a robust agency management system. There are several wonderful products on the market today that allow your entire team to stay on the same page as you sign on new clients and maintain your existing book of business. Here are three key considerations to make when you choose your agency’s new management system.
- Your Agency’s Current and Future Needs
Agency management systems are all a little different. Most scale with your agency as it grows. Before picking your next system, consider the needs of your team and your agency. Here are some key questions to ask:
- How helpful would it be to have your clients’ policies, quotes, and documents accessible all from one place, and who needs access to part or all of that information?
- Do you need your management system to double as an accounting system?
- Should your system integrate with your current contact relationship management (CRM) system or provide its own CRM platform?
- Is your team tech-savvy or will they require training and ongoing support?
- Software versus Cloud-Based Applications
Agency management software is installed on your agency’s computers or server, while you access cloud-based agency management systems using the Internet. Both have advantages and disadvantages. Software is convenient if you already have the necessary hardware at your office, have your own IT staff, and don’t need to access your system while you’re away from your office.
Cloud-based systems are great if you have a mobile office and need to access your system from the road. Cloud-based systems require minimal investment in hardware. Instead, you pay a subscription fee.
Your clients trust you with their most personal and sensitive information, so your agency management system needs to have strong security features. Ask vendors if their systems are built with security in mind and how they handle ongoing security concerns. Listen for buzzwords like “encryption,” “maintenance,” and “security updates.”
Whatever agency management system you choose, it will be an investment in the success and growth of your agency.
Property Casualty 360