Page 189 - The UnCaptive Agent

162 THE UNCAPTIVE AGENT

represents for a period as long as two years. This type of
barrier essentially means that the agency cannot leave
the aggregator without going out of business. So, while
aggregation has its advantages in allowing the agency to
represent more carriers (and potentially to have access
to more income), they also create a lack of flexibility
for the agency and potentially diminish the relationship
between the agency and the carrier.
The final problem that aggregators have—and by
extension, agents doing business with them—is that while
they have become something of a necessary evil for insur-
ance companies, that relationship won’t be permanent.
Insurance companies face increasing and relentless cost
pressures. To be competitive in the future, in an environ-
ment where all costs are knowable and known, carriers
must increasingly manage their expenses in order to
remain in business. Paying agencies more money because
they are big, or because they belong to aggregators who
make them big, is not a sustainable proposition for these
insurance companies facing increased cost pressure.
Carriers must reduce expenses to stay in business, and
they will. This must come at the expense of aggregators
and clusters unless these organizations offer carriers,
something else, they, in turn, cannot survive. The thing
they must offer insurance companies is organic growth,
but that isn’t part of their business model. That organic
growth requires coaching, mentoring, marketing, and a
myriad of other support functions for independent agents
that they aren’t organized to provide.

Insurance Development Organizations and Coaching

There is another kind of organization that combines
some of the aspects of clusters and aggregation but
removes the traditional disadvantages described above. I