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How do I know if I need a cluster?
How do I know if I need a cluster? Well, if you are not a large regional or national broker, chances are you will gain a competitive and professional advantage by joining a cluster.  Small to medium sized agencies tend to benefit the most at first because they immediately get access to more Top Tier Insurance companies, improved bonus commission structure and much greater opportunities for profit sharing.  

There are many variables an agency should consider when making the decision on joining a cluster organization.  There are the obvious barriers that most people instinctively consider – Initial costs, monthly or reoccurring fees, commission splits, ownership of the book of business, and giving an ownership interest to the cluster.  This is quite list and can stop many agencies right out of the gate.   Another major consideration is how you access companies and how many companies can you work with.  Do the companies require minimum premium commitments, will they appoint you without any preexisting premium, and will you have direct access or go through an “internal” placer?  Do you have access to all of the companies in the organization or do you pay for access to each company individually?  Is there training available to learn about all the companies?  Finally, a very big issue many agencies find out way too late - is there a penalty or non-compete if you decide to leave the cluster.  Every agency must consider an exit strategy and needs to understand the costs or penalties for leaving.   Ideally, the cluster will do everything it can to aid you in returning to a standalone agency or moving to another group. However, there are quite a few organizations that have major restriction that will hamper your ability to place, move and write new business and also have financial penalties that make it extremely difficult to leave.   The devil is in the details and make sure you review the exit clause before you sign anything.  

After all the aforementioned pitfalls, why would anyone join a cluster?  By joining the right organization, the advantages far outweigh the hurdles.  First of all, it gives an agencies a much broader range of carriers to compete in the marketplace.  It always seems like you are losing an account or prospect to another company you cannot get an appointment with.  Having those additional options for both companies and classes of business can help you grow your agency.  Typically, the cluster acts as a larger organization with the insurance companies that gives everyone the potential of improved commissions and bonus structures.  In many cases, being able to participate in profit sharing can pay for all the fees and a tidy override that drops right to the bottom line for the agency owner.  Another benefit that is harder to monetize, but is quite important to many agency principals is the chance to share ideas with other professionals who are facing similar challenges and market fluctuations

Axis Associated Insurance Brokers was created to emphasize the benefits of the cluster and try to downplay the hazards outlined earlier.  We are a community of professional agents and brokers who are working together to insure we all grow and thrive in this industry. We work with independent insurance agencies that are focused on growth. We do not have any penalties if you ever decide to leave, we want a mutually beneficial relationship and if it does not work, we will do everything we can to help you transition to your next phase.  We make state of the art technology and agency management system available to your agency so you can streamline the back end office work and be more productive.  We pay out 100% of the commissions to the agencies and 90% of profit sharing goes back to the agencies.  When you join our cluster you will gain our experience and guidance as well as the tools we have to help your company succeed. 

You can view our More Companies More Income More Growth storefront for more information on our services. Please feel free to give us a call if you have any questions! 


 

Dean Fletcher
Other articles by: Dean Fletcher
Categories: Insurance
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