Page 188 - The UnCaptive Agent

ON YOUR OWN: AGGREGATION OR AGENCY COACHING 161

agency community, and to qualify to join a cluster,
clusters typically require that the agency has been in
business for some period of time. This makes member-
ship in clusters essentially unavailable to startup agents.

Aggregators

Still, agents’ need for profit sharing to be competitive
financially led to the development of a new form of
business enterprise called an “aggregator.” Aggregators
arose to take the premium volumes of a large num-
ber of agencies and put them together to maximize
profit sharing and carrier representation. Many aggre-
gators operate across a large geographical area, which
also spreads the risk inside the book of business, and
potentially increases the likelihood of receiving profit
sharing from carriers on a more consistent basis for
small agents. The aggregator is typically rewarded by
taking a share of the profit sharing (and often com-
missions) that it helps to generate. Carriers’ traditional
antipathy for clusters extends to aggregators because
aggregators tend not to generate additional growth for
insurance companies any more than clusters do. They
are only tolerated in the industry. They can help the
small agent not only by giving agencies access to profit
sharing, but—because agencies can access profit sharing
with smaller volumes—they are also able to represent
more companies than they could support on their own.
This additional carrier representation means that the
agency has more competitive options for its prospects
and can potentially grow larger and faster. The trap
that aggregators pose is that, should the agency wish to
leave the aggregation organization, there are typically
significant barriers. The most onerous barriers include
the inability to represent carriers that the aggregator