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 blog series will investigate the different types of groups that exist in the insurance marketplace, as well as the benefits and drawbacks of aggregators and agency networks.

Benefit #1: Access to markets and carriers

Perhaps the most obvious advantage, and the reason a majority of independent agents seek out these types of groups, is access to markets. What does that mean? It means independent agents don’t automatically have a carrier or insurance company they represent. They have to actively seek out contracts with multiple insurance carriers in order to offer their clients insurance coverage. The advantage for independent agents is that by representing multiple carriers, they can offer their clients more options, including TYPE of coverage plans, AND at the best price. Unfortunately, it’s extremely difficult to get markets when an agent first starts out in the business because they have no history with the carriers in the industry. They have to gain the trust of the carriers first. Agency networks and aggregators can help the agent achieve this by establishing a relationship with the carrier first. This means that the agency network is directly contracted with the carriers themselves, and then – with their pre-established relationship – helps agents they’ve vetted and contracted with themselves, become appointed to write business with those carriers.

Stay tuned for more in our blog series!

Captive vs. Independent Agents: Which route should I go?

If you’ve recently looked into opening your own insurance agency, and you aren’t sure whether you should go the captive or independent route, look no further.

There are positives and negatives to both models of insurance businesses, but it really comes down to individual needs and wants. What are you looking to get out of the business? How experienced are you?

Captive Agents

Positives: Owning and operating a “captive” insurance agency means working for one company. You will only have to learn one company’s products, policies and guidelines. There’s usually ample training, assistance setting up your agency, and you won’t have to worry about doing any of your own advertising and marketing because you’ll have the added benefit of a nationally recognized brand. You will also likely have a more reliable form of compensation such as a salary and benefits, plus sales bonuses depending on how well you do.

Negatives: You will only have one product to sell your customers. Even if they are not the best priced or most suitable product, they are the company you represent, therefore the product you must convince your customer to go with. So if your parent company stops selling a certain line of insurance, you won’t be able to sell it either. You may also be obligated to push certain products you feel your client doesn’t need or want. Your main priority, as a captive agent, will be to build business for your parent company, and you will likely not have the freedom to perpetuate your agency to whomever you wish when you’re ready to retire.

Independent Agents:

Positives: Your main priority for your independent agency will be to build your own book of business and do the right thing by your customers. You can make your own hours, your own rules, and market your agency how and when you want. You’ll be able to specialize in any, and as many lines of business as you want. Best of all, you will be able to provide competitive quotes for your clients by shopping a multitude of different insurance carriers products! This means if you can’t find a suitable product with one carrier, you’re free to search out another carrier with a more suitable product line for your clients’ needs.

Negatives: As an independent agent you will be a small business owner and entrepreneur. This could be viewed on a positive OR negative depending on the person. You will need capital to start the business. You won’t have a steady income as you begin your agency and start your book of business from scratch, because you’ll earn money solely based off of commission. The money you do earn will have to be wisely put back into the agency in order to grow for the first couple years. You may also have trouble obtaining contracts, or “appointments,” with reliable and reputable insurance carriers in the beginning – a Managing Agent Group or “MGA” (company who helps you get carrier appointments) can help you with this part of the process.

Which type of agency is right for you? If you’re an established agent, comment below and tell us why you decided to go the route you did when you opened your agency!