Today's Viewpoint: A MarshBerry Publication

Myth Busting: The Truth About Insurance Clusters, Aggregator Programs, and Agency Network Perceptions

The perceptions insurance agencies and brokerages have of aggregation programs are often misguided. Historically, aggregation models have been seen as useful for start-up firms, small-scale agencies, or captive brokers converting to an independent firm model. Comments, like the following, are often heard:

“Our firm already earns top commissions and will not split commissions with an aggregator.”

“Our team is happy with our current carrier and wholesale markets.”

“Accessing markets is not a current issue.”

“Working directly with carriers is a priority to maintain relationships.”

Each statement might be true – or at least true based on the firm’s experience. However, not all aggregation models are built the same. Many aggregation programs can provide insurance agencies with improved service offerings, access to new technologies, enhanced carrier access, and more. These enhancements can help boost revenue growth and efficiencies. 

Below are the Top 5 Myths about aggregators that MarshBerry hears routinely and why it could be time to think differently.

Myth #1 – Aggregation Programs Are All the Same

Reality: Each aggregator platform is different. “Aggregator” tends to be a catch-all phrase with many different models including – networks, pure aggregators, market access entities, clusters, partnerships, and combination models. When evaluating a potential network or aggregator, firms should start by asking these types of questions to find a model that best fits their needs:

  • What are the initial and ongoing costs involved?
  • How are commissions earned and is there any potential for commission splits?
  • What carrier access will be available?
  • How does the network handle policy ownership?
  • Are there technology requirements?
  • What services are provided?
  • What’s the profit share/bonus potential and how are bonuses calculated?

Myth #2 – Aggregators Are Only for Start-Ups

Reality: With more than 35,000 insurance agencies and brokers in the U.S., it’s estimated that over 70% are part of a network. According to Insurance Journal’s annual list of the Top 20 Agency Partnerships, about 64% of firms utilize one of these Top 20 networks. Furthermore, 50% of the member companies (who partner with the top 20 agencies) have annual revenue of approximately $2.0 million or higher. Clearly, these savvy, tenured agencies and brokers are using these networks to grow their firms faster by leveraging the resources available.

Myth #3 – Aggregators Are Only for Small-Scale Firms

Reality: Insurance Journal’s Top 20 Partnerships list features firms with more than $4.8B in property & casualty revenue equating to more than $40B of premium. More importantly, 65% of the groups on the Top 20 list have memberships which average over $1M of annual commission revenue. Agencies that earn more than $1M of annual commission are not considered small, rather they are often classified as medium/large.

Myth #4 –Agencies & Brokerages Join Aggregators Only for Market Access or More Compensation

Reality: Yes – many firms join an aggregator for market access or compensation. However, many are also seeking a community forum for shared resources, technology, best practices, peer-to-peer exchange, and carrier advocacy.

As stated in Myth #1, there are many different types of aggregation models that have unique structural nuances. In addition, no organization within each model segment is the same. Therefore, firms shouldn’t make assumptions on how an aggregation model operates in relation to the commission, bonus compensation, ownership, direct carrier access, change in their existing relationships, operations, or succession.

Not a Myth – Most Firms Aggregate

Firms constantly experience the demand for more production from their carriers. Carriers are also constantly reevaluating their compensation agreements, along with the resources they allocate to agencies and brokerages. The pressure on production, resources, and compensation will likely only increase in the future.

If you have yet to consider an aggregator, contemplate some myth busting of your own. Select a model that supports the goals of your firm. Specifically, does it:

  • Drive additional revenue?
  • Enhance carrier access?
  • Improve service offerings to your clients?
  • Provide cutting edge technology that streamlines your business?
  • Offer a shared community for exchange?
  • Fuel organic growth?
  • Drive the value of your firm?

Seventy percent of firms that benefit from aggregation programs, including some of the largest agencies and brokerages, can’t be wrong.

If you have questions about Today’s ViewPoint or would like to learn more about MarshBerry’s financial advisory services and how aggregator models can help propel growth, email or call Andrew Katz, Vice President, at 440.637.8121.Subscribe to MarshBerry’s Today’s ViewPoint blogfor the latest news and updates and follow us on social media. 


1MarshBerry proprietary financial management system perspectives for High Performance (“PHP”); Historical EBITDA as a % of Net Revenue.  2Federal Reserve Economic Data as of February 16, 2021.  3Renaissance Capital, SPACInsider

MarshBerry continues to be the #1 sell side advisor in the industry (as ranked by S&P Global). If you’re considering selling your firm, we are the best choice to help you through the complicated process. If you don’t hire MarshBerry, hire a reputable advisor that can help you navigate one of the most important business decisions you will ever make. You will be much better off having an advisor in your corner that knows the industry than trying to do this on your own. 

MarshBerry continues to be the #1 sell side advisor in the industry (as ranked by S&P Global). If you're considering selling your firm, we are the best choice to help you through the complicated process. If you don't hire MarshBerry, hire a reputable advisor that can help you navigate one of the most important business decisions you will ever make. You will be much better off having an advisor in your corner that knows the industry than trying to do this on your own.