4 Insurance Cluster Group Fees Explained … and How You Can Avoid Them

October 26, 2015

By Michael Miller, Smart Choice® State Director

Joining an insurance cluster group is a great way to gain access to appointments with carriers that would be off-limits if you were negotiating on your own. Cluster groups give independent agents power in numbers — a group of agents has more buying power than a single agent alone, leading to more profits.

Many insurance cluster groups charge their members several fees to take advantage of their benefits. Here are some of the more common cluster group fees.

1. Start-up or initiation fees.

Some cluster groups charge fees—often thousands of dollars—to join their organizations. These fees can be a barrier for new agencies. To save money, look for a cluster group with no start-up fee.

2. Monthly fees.

A cluster group’s monthly fee could be fixed, a percentage of your commission, or a combination of the two. Before committing to a cluster group with a monthly fee, take a look at your agency’s past revenue — are some months slower than others? Inconsistent monthly revenue could make it difficult to pay your cluster group’s monthly fee.

3. Maintenance fees.

Maintenance fees cover ongoing benefits the cluster group offers its members, such as advertising and agency management software. Not all cluster groups charge maintenance fees, so do your homework when shopping for a group.

4. Exit fees.

Want to switch cluster groups? That decision may cost you. Some groups charge members a fee to leave the organization. Add this fee to your list of things to look for when you’re shopping around.