TO AGGREGATE OR NOT ? THAT IS THE QUESTION .
By : Doug Smart , KAIA President
The landscape of the insurance industry has changed significantly over the past 10 to 15 years . One significant change is the proliferation of interagency relationships via networks , clusters , and aggregators .
As a tool for members thinking of joining an agency network or aggregator , KAIA published a worksheet of things to consider . From my perceptiion , as a member of an aggregator and the state association , there are pros and cons to aggregating , depending on the rules regarding the group you are joining .
One of the biggest benefits of aggregating is the potential of gaining new company contracts , often referred to as market access . The volume an aggregating group produces often allows smaller agencies to access larger markets that they would not usually contract with due to minimum premium requirements . This is also something that KAIA helps members with through its market access program with the goal of agencies being able to get their own direct carrier contract someday . Some aggregators can arrange for extra commission for their agents due to the group ’ s large volume of business with a particular company and ability to provide premium growth Depending on the aggregator ’ s rules , this additional commission can be paid to the aggregators or may go to the agent . Higher profitsharing contingencies or guaranteed compensation when premium targets are achieved may be another benefit .
Many aggregator contracts have non-compete agreements
with partner agencies . Those can benefit you or be a detriment , depending on which side of the fence you land . If you have a large account you don ’ t want to lose , a partner agency won ’ t be able compete on the business . However , if the partner agency has an account you want to write , you won ’ t be able to go after it either .
Intellectual capital may be the biggest benefit of being involved with an aggregator . The ability to direct questions to a large group of your fellow agents regarding coverage , market placement , loss examples , etc ., is priceless . Plus , just having the opportunity to rub shoulders socially at meetings with fellow agents is always fun and educational . There is some overlap here with the benefit of being a member of KAIA . I find the networking opportunities at association so beneficial and often learn a lot from conversations with follow agents .
Simple economies of scale is another benefit of being a member of an aggregator . Larger aggregators can get better deals on things such as agency management systems software programs , software rating programs , computers , office furniture , you name it . Often with the sheer number of agents attending aggregator meetings , company ’ s may pick up meal costs or drink tabs since they get visibility with of so many agents at one time . KAIA also supports its members in this way as well with discounts on Vertafore products , branding resources , hiring tools , websites , and rating platforms .
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