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The Pros and Cons of Joining an Insurance Cluster

Running your own agency is tough in today’s market. Is an insurance cluster a viable option for your agency?

We have put together a list of pros and cons to aid you in determining if this business decision is right for you. You have taken the steps to build your agency by focusing on internal growth and external solutions, but you are still struggling to keep your head above water. You want to remain in business for many years to come, but you are unsure of how to survive. So what solutions exist for an agency whose owner does not want to lose his or her independence? One option is to join an insurance “cluster” or network.


You Remain an Independent Agent. Even though you are joining an association or cluster, it is not like a merger or acquisition. You remain an independent agency, you continue operating under your current company name and appointments, you receive commissions directly from your carriers and you retain your current marketing and underwriting contacts (in most cases).

Greater Access to Carrier Markets. When you join a cluster, you gain access to many desirable carriers the cluster has developed relationships with through collective bargaining. This is often a struggle for smaller agencies, who do not have the leverage to get appointments.

Top Notch Sales and Marketing Support. Some offer additional support or advice, marketing consultation and assistance with marketing your accounts, agency management tools and procedures, sales tools and coaching, training opportunities and shared services for things like payroll and direct mail campaigns.

Information Sharing and Networking. One unexpected benefit of an insurance cluster is the added value of sharing information and networking with the other agents in the group. Monthly newsletters, trade shows, regional meetings training webinars and group forums are just some of the things you might expect.


Poor Organization at the Top. Depending on the cluster’s organizational structure you may be joining a cluster with a dedicated manager or you may be joining a cluster where the administrative responsibilities of managing the cluster are someone’s “secondary job.” This may make for difficulty in the cluster’s ability to build necessary relationships to grow and be relevant.

Unintended Fees and Financial Concerns. When shopping for a cluster, do your homework! Are there exit penalties? Who owns the book of business? Are base commissions paid to you at 100% or some lower figure? How is the cluster performing with its top carriers? Will your operating margin change because of shared commissions? Is profit sharing shared back with members in the cluster? Are agencies required to qualify under new formulas introductory to the cluster? These are all important questions to ask to make sure that joining the cluster will not adversely affect the value of your agency.

To learn even more about insurance clusters, click to read our What Is an Insurance Cluster? blog post, where we go into more depth regarding the benefits of joining a cluster like UVIS.