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What Is an Insurance Agency Cluster?

insurance cluster

In the insurance industry, an insurance agency cluster is a group of agents and brokers who form a formal association or joint venture in order to provide one another with support, benefits, and marketing opportunities.  By forming a working alliance, an agency’s resources are joined with other agencies or brokers to former a larger block of business and take advantage of the benefits of such an association.  

Some of the objectives of agencies or brokers forming a cluster (also known as an agency network group or alliance) include the following:

  • Increased profit sharing agreements with targeted markets because of the increased volume associated with consolidating
  • Better utilization of capital and overhead expenses, improved access to automation and technology, and increased productivity and more effective usage of personnel
  • Creating a potential opportunity for a future buy out if any agent who is part of the cluster wishes to sell
  • Increased opportunity to develop and market new products, new lines of business, and additional services

An insurance cluster provides an agent with the ability to maintain independent ownership of their accounts and/or their agency.  The operation and organization of insurance agency clusters vary dramatically depending on the needs and desires of its member agents.  

Members of a cluster may share an office operating space and staff or they may each maintain independent locations and personnel.  Clusters allow small insurance agencies to remain competitive and increase their bottom line.  

Advantages to Joining an Insurance Cluster

  • Networking and support:  An insurance cluster provides a built-in support network with other industry professionals.  Insurance agency clusters also offer members access to various kinds of support, such as marketing, technology, payroll, and more.
  • Increased access to carrier markets: Agency clusters allow agents to pool their resources in order to gain access to carriers which they may not otherwise have the ability to access.
  • Maintain independence:  Insurance clusters enable agents to remain independent, operating under their own names and keeping their current clients.  In most cases, agents retain their current marketing and underwriting contacts.
  • Increased compensation:  Improved commission structures that come with combining smaller agencies under the umbrella of a master agency lead to increased compensation and profit sharing.  In addition, sharing personnel and other resources improve the financial situation of the member agencies.  

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