Insurance Aggregators – The Best Way Forward for Insurance Agents

The insurance industry landscape has changed drastically over the years. Just like other insurance professionals, insurance agents must also change to adapt to this shifting industry. The traditional insurance model is no longer as strong as it used to be. New models of selling insurance are coming to the forefront – agency aggregators, for instance. As an insurance agent, how can you benefit? Read on to find out.   

How are Insurance Carriers shaping the Market?

Advances in technology have changed how insurance is sold. Insurance carriers have used this to their advantage. A visible example of this are online insurance platforms. Through online websites, insurance carriers can directly sell to the customers – cutting insurance agents out of the equation.

Why is direct to consumer (DTC) insurance gaining popularity?

 There are two main reasons for the rise in DTC insurance:

• It cuts costs for the insurance carriers. The customer fills out the form and the carriers save on the commission that would have been paid to keep the insurance agents.  
• The customers can buy the insurance themselves. Cutting out the “middle-man” speeds up the process.

Will DTCs put insurance agents out of their jobs?

To match step with the popularity of the DTC model, agents need to take a new approach to how they sell insurance. The DTC model is not going to replace them. After all, it can only provide quotes for more straightforward insurance policies, such as auto.   

For more complex insurance such as liability, both customers and insurance carriers still need insurance agents. But agents can no longer rely on the old models of selling to stay relevant. They will have to adapt to changes that come along with these advancements.  

How should they go about doing this?  

The first step is usually to become an independent insurance agent. Independent agents are not reliant on only one insurance carrier. They can be flexible with how they sell insurance. However, going independent can be difficult. Agents often find themselves pulled in many directions. 

So what can an independent agent do to make it easier for themself? 

Join an insurance aggregator aka insurance cluster. 

What is an Insurance Aggregator?

Insurance aggregators are formal associations of insurance agencies created to provide mutual support. They are also referred to called as insurance clusters, agency aggregators, insurance alliances, or insurance networks.  

An insurance aggregator is a good fit for small to mid-size agencies. The member agencies in an insurance cluster usually pay a fee to join. After that, they can enjoy the benefits of being part of a group of agencies in the same industry. The shared pool of experience and resources can prove to be invaluable as a collective. After all, there is safety in numbers. 

Benefits of an Insurance Aggregator/Cluster

What exactly do insurance agency aggregators offer that makes them attractive? 

 Listed below are some of the benefits of joining an insurance aggregator: 

Independence 

An agency cluster is comprised of several agencies working together to give each other support, but each agency keeps its autonomy. These clusters give agents the freedom to follow individual goals, but also enjoy the power of numbers. 

Networking 

Every agent benefits from a network to support them. It is why so many choose to become a captive agent – the security of belonging to a known insurance carrier. However, the cons of going captive significantly offset the gains.  

That is not the case with insurance aggregators. An insurance cluster props up independent agencies with its co–operative approach. Networking opportunities with others in the industry lets you put your best foot forward. 

Marketing and Sales Support 

 An insurance cluster gives you immense marketing and sales support. These can range from advertising help to lead generation opportunities. Not just that, you benefit from the positive reputations of other members in the cluster. An aggregator may even hire marketing specialists to improve the public reach of their agencies. 

Market access 

Pre-existing relationships of the members in your aggregator give you clout with insurance carriers. Getting new appointments is easier. In this age of choice, a greater variety and selection of policies equals better customer retention. Even large organizations recognize the power of insurance aggregators and their future in the industry. From general liability insurance to something as specialized as liquor liability insurance, providing a variety of policies to your client has never been easier.  

Industry members like Insurance Business state that more than 80% of independent agencies in the US will be part of an aggregator group within the next five years. 

Larger commission splits 

 The exact commission split of an agency depends on their agreement with their aggregator. Regardless, the commission split is better than any that a carrier offers to its captive agents. Agencies get a say in the matter. This is not possible with insurance carriers who enforce rigid rates. 

Better Technology 

 Insurance software and technology does not come cheap. However, it is crucial for success in the current age. Agency aggregators reduce this financial burden on their members. They provide members with up-to-date insurance customer management systems. 

The benefits listed above are valid for almost all agency aggregators. However, they will differ in other finer details. We advise that you shop around for the aggregator that is the best fit for you. Sites like Insurance Journal provide you with a quick overview on aggregator options. 

However, be mindful that insurance aggregators have looser commitment policies than insurance carriers. If a member leaves the cluster, they leave a space. In an alliance such as these, any exits can lead to increased overhead costs for remaining members. Once again, it is in your best interest to compare insurance aggregators and their members. Never jump in without reading the fine print! 

Are Insurance Aggregators the only way forward?

They are not the only way forward, but they are most definitely the best way forward. A lone agency will not fare well against the pressures of an ever-changing insurance industry. However, an insurance cluster will. These pressures range from the rapid rise of technology to government policies affecting insurance. Insurance aggregators give you the best odds for success.

Do you agree with us? What are your thoughts on joining an insurance aggregator? Let us know in the comments below.