What is an insurance agency network all about? Can it really help independent insurance agents grow? What can joining an agency network do for your day-to-day business? In short, there are questions you must ask and answer for yourself to know if joining one is right for you.
I wrote this article to help you determine if joining an insurance agency network is the best decision for your agency. We’ll talk about important topics like:
- What an insurance agency network is
- The benefits you get from joining one to help you determine if it is right for you
- The downsides of joining one to help you decide if it is a wrong decision for you
- What you should think about before joining as an insurance professional
Joining an insurance agency network can be an effective strategy if it’s right for you. So, read through this article first and decide. While you’re here, take a minute to subscribe to my newsletter. You’ll get information that can be used as your secret weapon to gain and keep that competitive edge!
Insurance Agency Network: What Is It
Just what is an insurance agency network? So, first, think about captive insurance professionals and all of the support they get from their parent companies. It is true they don’t get the power to make many independent business decisions. Yet, they get a lot of support in other ways, such as professional development and carrier access.
Independent agents don’t get the same support. Sure, we get to make our own decisions for our businesses, but other than that, we are on our own. An insurance agency network, such as OAA (which I co-founded), acts as the support system we don’t otherwise have.
Your agency and other independent agencies join forces to create a support network. Several great benefits come with joining a network such as OAA. Like the fact that joining can increase your sales and give you the ability to develop relationships with carriers that you had the ability to work with before.
This market access also enables you and others in the agency network to do things such as negotiate higher commissions to improve their growth opportunities.
Let’s look at the other benefits of joining an insurance agency network and whether joining one is right for you.
What Are the Benefits of an Insurance Agency Network?
While we talk about the benefits of joining an agency network, keep in mind that you may not need all of the benefits or may not be interested in them. So, that’s something you need to keep in mind.
These are things that only you can answer.
- Consultations. Things like tax prep, learning about EBITDA, how to better manage your book of business, and other intangible factors that can impact your agency’s value can be confusing if you try to tackle them on your own. Agency networks like OAA can help you better understand these matters.
- Advice. Imagine getting advice from more experienced independent agents about things like HR prep, data-sharing tools, or how to improve the customer experience. Because you’re a member of an agency network, you’re partnered with agents who can give you advice.
- Opportunities for continuing education. Instead of being on your own to seek the continuing education you need, imagine you had immediate access to various educational opportunities. What if you could learn more about how you can improve the customer experience? What if you could know more about cutting-edge ways to market better to grow your book of business? That’s what joining a network alliance can do for you. Not to mention how great insurance agency networks are for licensing help.
- Learn more about other business models. Sure, you’re probably happy with your business model, but what if you want to change it in the future? What if you want to sell your agency? What if you want to buy one? Who do you ask if you’re independent? Getting involved in an agency network can allow you to develop relationships with other insurance agents who have experience with other business models.
- Access to insurance carriers. This is a favorite benefit of many agents. Because of working together, insurance agency networks often allow the member agents to access more insurance carriers than if they worked solo.
Is joining an insurance agency network like OAA a good fit for you? The question is whether or not you would use the benefits offered and how often you would use them.
So, are there any downsides to joining an insurance agency network? There can be.
The Downsides of an Insurance Agency Network
Every opportunity has two sides, and joining an insurance agency network is no exception. Again, you must consider this information based on the needs of your independent insurance agency and whether the following information balances out the benefits you’d receive.
- All of the costs involved. All insurance agency networks have different costs involved. Some have start-up fees, monthly fees, maintenance fees, and exit fees. So, do your research before you join. Know what you’re getting yourself into.
- Group attrition. When members leave the group and take their book of business with them, it can impact your income in some cases because profit sharing decreases.
- The reputation of the agency network. Does the agency network have a good reputation with independent agencies? If they don’t, there could be several reasons for it. One of the main reasons for it is likely poor management of the network. So, before you join, you need to perform your due diligence on the network to make sure that you know what you’re getting yourself into.
- Relationship with insurance carriers. To help get insurance agencies like yours better access to insurance carriers, they need to have a good relationship with them. And that relationship needs to be strong. There are other factors involved as well. The insurance agency network may also have a relationship that involves insurance carriers needing to improve each agent or book of business.
So, these are downsides that you need to think about and ask about before joining an agency network.
What to Consider as an Insurance Agent Before Joining an Insurance Agency Network
We’ve talked about the pros and cons. What else should you think about before you choose to join?
Cost to Join
As I previously mentioned, there can be several costs associated with insurance agency networks. The first thing to think about is the cost to join. Are you looking at a start-up fee in addition to a membership fee? Is the membership fee monthly, or is it paid yearly? Will you need to pay a maintenance fee? What about a fee if you decide to quit? Clarity is vital when it comes to fees. You don’t want or need any surprises.
When do you plan to retire? If you plan to retire within the next five years, joining an insurance agency network may be a way to improve your retirement opportunities. This is possible if the agency network can help you grow your income with better carriers, better compensation agreements, increased bonus and profit-sharing, and reduced operating expenses realized through group discounts. All of these things can increase your bottom line, resulting in more income to convert to savings during the last years of your career as well as increased agency value when you sell.
Another thing the right agency network can do to increase your retirement account is by increasing your agency’s value through a sale inside the network. We see a number of agency sales in our organization each year at a much greater value than the industry as a whole. I call this the “network effect” and it can make you a lot of money. Even though joining a network can be a huge benefit don’t forget to focus on your succession plan, and perpetuation plan well in advance to maximize your results.
How Will You Benefit?
Consider everything you need to make your independent insurance agency more competitive and more profitable. How will an insurance agency network like OAA benefit you?
Insurance Agency Networks — Your Source of Freedom
Joining the right insurance agency network can be great. What you have to determine is if it fits your needs. Ultimately, that’s only something that you can determine. So, you really have to know what you want now and in the future.
Learn more about growing your insurance agency and how to make a better customer experience by joining my newsletter. And if you have a question you don’t see answered? Reach out to me! I’d love to hear from you.
Always keen on helping others make their dreams come true, Tony and his team have helped independent agents grow into more than 250 independent agencies. This has made OAA the number one ranked Strategic Master Agency of SIAA for the last 5 years, and one of Oklahoma's 25 Best Companies to Work for.
Tony loves to share his knowledge, insight and wisdom through his bestselling books as well as in free mediums including podcasts and blogs.
Tony and his family are members of Crossings Community Church, and he is very active in community initiatives: he’s chairman of It’s My Community Initiative, Inc., a nonprofit working with disadvantaged people in Oklahoma City; and chairman of the Oklahoma Board of Juvenile Affairs., and he has served through many other organizations including the Salvation Army, Last Frontier Council of the Boy Scouts of America, and the Rotary Club.
In his spare time, Tony enjoys time with his family. He’s also an active outdoorsman and instrument-rated commercial pilot.