An insurance cluster is a collection of agents and agencies that have banded together in order to increase their buying power. Insurance clusters are formally structured organizations that have clearly defined memberships and rules. The goal of one is to reduce costs for customers while also increasing profits for the agents, and in many cases the power of working together also allows a cluster to offer a more diverse range of products. There are, however, several factors to keep in mind before moving into one.
Costs
The more successful a cluster is, generally, the more it can impose fees on new members. It is common for established clusters to require initiation fees. Nearly all also expect monthly fees to be paid, and some may seek maintenance fees to cover the costs of advertising and providing software to member agencies. In order to deter roaming among clusters, exit fees are often required, too.
When expressing your interest in joining an insurance cluster, make a point to talk about all these potential fees. Don't be afraid to haggle a bit.
Networking
One advantage of an insurance cluster is that an agent has access to a ready-made professional network. Many clusters operate website forums and social media pages that allow members to quickly connect with each other and talk shop. If you're curious, for example, about coming changes in your state's tort requirements for car insurance, you can strike up a conversation and tap into the knowledge base your fellow agents can provide.
It's normal for a cluster to operate a mentorship program. If you're new to the insurance industry, this can help you get up to speed much faster than trying to learn on the job.
Mutual Agreements
Providing members with access to a commission structure that improves profits is a big part of the insurance cluster system. Bring collective power to the table, the cluster can work with insurance carriers to create arrangements that leave more money in an agency's accounts. The insurance company benefits by having access to a larger pool of customers, and that especially helps to expand its risk pool.
Mutual arrangements can also be reached in other areas, including marketing agreements, payroll processing and technical support. A small agency can get access, for example, to software that requires a large number of users to cost-effectively license. By sharing resources with members, an insurance cluster streamlines many processes.
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