How to Choose the Best Insurance Agency Cluster for You
You have made the decision to join forces with an insurance cluster or network, but how do you choose the right one for your agency?
In the insurance industry, agency cluster groups (also known as alliances, networks and aggregators) are formal associations of insurance agencies established to provide “members” with mutual support and group benefits. A cluster is essentially a master agency, with a group of retail agents beneath it, under one master code.
There are many benefits in joining a cluster, including access to carriers, better commission structures, improved profit sharing and additional resources for business operations, all while remaining an independent agent.
Once you make the decision to join an insurance cluster, it can be difficult to figure out which organization is best for you.
Factors to Consider When Reviewing Insurance Clusters
There are no two organizations alike, so it is very important that you do the research to determine if a particular cluster or network is a good match for your agency. The first thing to do is visit the websites of clusters operating in your state, and establish the following:
Is the cluster accepting new members? Many clusters or networks have an open enrollment plan and actively accept and add new members to their group. However, other groups have closed membership enrollment and only offer services to existing members.
What are the minimum requirements to join? Many welcome start-up agencies, while others have minimum requirements to join and require only established agencies with a minimum premium volume.
What are the costs associated with joining? Most clusters have an initiation fee and monthly payments, which can vary from a percentage of commissions to a fixed rate fee (or a combination of both).
What are the biggest benefits of each organization and how do they compare to one another? Review each website and learn as much as you can about the benefits of each group. Agreements and contracts vary from group to group. It can be a good idea to create a comparison spreadsheet to keep track of your data and research. You should also review the carrier appointments and determine if those carriers are going to meet your target markets.
You Have Narrowed Down the List. How Do You Choose?
You have narrowed down the list to two or three clusters. They are fairly comparable in benefits and compatible with your business practices. How do you choose which is best for your agency?
Pick up the phone and contact the cluster directly. Speak to a membership consultant to get a feel for the entire setup and culture of the cluster. Fit is very important and it can be difficult to gauge the culture by web presence alone. Sometimes speaking directly to a live person can either put your mind at ease or raise a bunch of red flags. Prioritize your list and start at the top.
Call existing cluster members. After the initial contact, call three to five of the cluster members from your top contender. Stay away from cluster suggested references, as those agencies are most likely biased and coached on what to say. Look for agencies with similar books and in the same general geographical area as you. Most websites have a list of members, but if your cluster choice does not, you can look up the license on your state’s website to get more information.
Speak to principal agents at each independent agency and ask many questions. Find out what they are most happy with and least happy with and if they plan to continue their membership long term. Ask the questions that matter most to you.
You can also do a simple Google search to see if any positive or negative feedback or reviews exist. Be open-minded and cautiously optimistic. Remember people can post anything they want online. It is a good practice to verify the accuracy of what you read online with more than one source. Finally, no one size fits all. What may be good for you may not be good for another.
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