Independent Insurance Agency Clusters vs. Aggregators

June 14, 2021

Illustration of man with magnifying glass, trying to understand the differences between Independent Insurance Agency Clusters and Aggregators.(...and How They Compare to Agency Networks)

Agency Network. Aggregator. Cluster. The words are used interchangeably in the insurance industry, but are they really the same thing? If you are an independent agent looking for market access and agency growth, is it worth joining some type of an alliance, and how do you know which one is right for you?

While all three terms are used to describe agents combining or joining together to increase their benefits, there are differences — some nuanced — while others can have far-reaching impacts on the value and viability of an agency.

What are Insurance Cluster Groups?

An agency cluster consists of a group of agents that bring their individual books for a particular market to form a larger book of business, establish clout, and improve profit sharing within that market. This may be in the form of a new entity just for that market and in many cases, the agent will operate independently in all of their other markets. In most cases, a cluster is located regionally or locally and does not have a national presence. 

What is an Insurance Aggregator?

Aggregators seek to roll premiums of a specific market into one “bucket” to establish additional revenue from a market. Unlike a cluster, they may aggregate several markets and an agent would need to “join” the aggregator who would then have a vested interest in some part of their agency. Agencies are often required to have a certain amount of premium already written through a certain market to be able to join. 

What about Insurance Agency Networks? 

Agency Networks also offer the benefit of combined premium books to elicit better profit sharing and benefits, however, they’re much more than that. Networks often operate on a national scale and work on behalf of the members to establish national relationships with carrier partners.

Unlike a cluster or aggregator, they provide a variety of tools to help agencies grow their business, including mentorship and advice on best business practices. The network’s partnerships with carriers enable them to pass along a host of benefits to the member agencies such as access to appointments, higher revenue and commission opportunities, additional incentives, and higher profit sharing. 

Another advantage a network can provide is the ability for members to work directly with the carrier partners unlike a broker or wholesaler — they work to help the agent establish a relationship with the carrier partner. Additionally, a network passes along training, other vendor partnerships like discounted E&O or rater programs, and non-carrier-related services and support. The network enables an agent to take advantage of the size of the network as a whole while maintaining independence and control of their agency.

Independent insurance agents weighing the pros and cons of insurance cluster groups and agency networks.You’re an Independent Insurance Agent. How Do You Decide? 

While there are many available options, Smart Choice is a proven partner for start-up, former captive, and experienced agents alike. With over 25 years of experience, 100 carrier partners, and service in 45 states, we can help agencies access top-rated markets and grow their books of business. We offer four no fee, low production requirement programs that can get you writing personal, commercial, life, or excess and surplus business today. Reach out to start the process of becoming a Smart Choice Agency Partner today.

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