Is an Insurance Agency Cluster Good for Growth?

Mary Ann Smith | August 24, 2021

An independent insurance agent reviewing charts to determine if an insurance agency cluster is good for her agency's growth.As an independent agent, you’re constantly trying to grow your business. Trying to do this on your own can be like trying to swim upstream — everything seems to be working against you. That’s why a lot of independent agents decide to join forces with a larger organization.

If you’re currently exploring your options, you might be wondering — is an insurance agency cluster good for growth? Everyone’s situation is different, but here are some issues to consider.

What Are Insurance Clusters?

An insurance cluster is a group of agents who combine their books of business. By pooling their business in this way, they can go from being small fry to being big fish. This can result in many advantages that the individual agents might not have on their own.

Accessing More Products Through an Insurance Agency Cluster

Getting access to top carriers and products can be a major hurdle for independent insurance agents. Many carriers have strict production requirements, and you may have a hard time qualifying on your own.

This can create something of a Catch-22 for independent insurance agents. You can’t attract more clients until you can offer top carriers and products, but you can’t access top carriers and products until you build up a bigger business with more clients. 

By joining an insurance cluster, you may be able to gain access to more carriers and products. Your cluster may also succeed in negotiating better commissions. This could certainly help you grow your business.

Determine Whether the Insurance Cluster Will Provide the Support you Need

Agents in a cluster pool their books of business. They may also share other aspects of their business. For example, they may cooperate to secure software licenses at a good rate, and they may share marketing resources. 

If a cluster provides the resources you need, it’s easy to see how joining one could potentially help you grow your business.

Could Joining an Insurance Agncy Cluster Backfire?

Not all insurance clusters are the same. Before you join one, you need to research it carefully to make sure it’s a good fit for your needs. If you join one that doesn’t meet your needs, it might not help you grow. It could even slow you down.

Cost is a key issue. You may be required to pay a fee upfront, and you may also be required to continue paying throughout your partnership. Before you sign up, you need to know exactly how the fees work. Also look into any other requirements for joining and find out what will happen if you decide to leave the cluster.

What if an Insurance Cluster isn't for Me — Are There Any Other Options?

Two male independent insurance agents discussing partnership options and joining an agency network.If you research insurance clusters and decide they’re not a good fit for you, this doesn’t mean you have to go it alone. An insurance cluster is just one type of organization designed to help independent insurance agents. Networks are another option.

Insurance networks are like insurance clusters in the sense that they can give independent agents access to more carriers, more products and higher commissions that they could access on their own. Networks can also provide the sales support, product training and marketing help you need to fuel your agency’s growth — and they can do all that with no fees!

How Far Can You Go as an Independent Insurance Agent?

Independent agents have good income potential. According to Glassdoor, the national average salary for an independent insurance agent is $74,361 per year. That’s not too bad, and some agents earn much more — Glassdoor puts the high end of the salary range at $184,000!

And then there’s the low end. Some independent agents only earn $30,000 a year, according to Glassdoor. 

How much YOU earn will depend on a lot of factors, like where you live, which products you sell and how hard you hustle. The organization you partner with is another key factor. This decision can help make or break your career, so make sure you’re working with an organization that can contribute to your growth.

When assessing an insurance cluster or network, think about what YOU need to grow your business.

  • Will you gain access to top products and carriers? With access to more products, you’ll be in a better position to help clients find the policies they need. 
  • Which lines are supported? One way to grow your business is to widen the scope of your agency offerings. For example, even if you only sell personal home and auto now, you might want to expand into commercial lines and life insurance in the future. 
  • What marketing, sales, and training support will you get for joining? The right services can help you grow your business with confidence.
  • What are the requirements — financial and otherwise — for joining? Watch out for hidden costs that can stand in the way of income growth.

See How Smart Choice® Stacks Up for Independent Insurance Agents

Smart Choice® has been helping independent agents since 1994. As a Smart Choice agency partner, you’ll enjoy notable benefits such as our no-fee program, low production requirements, dedicated product training, and access to many of the nation’s best insurance carriers.

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Mary Ann Smith