You’re not imagining it: agency network outreach has ramped up across the insurance industry in recent years. Whether it’s email, voicemail, or LinkedIn messages, the volume can be overwhelming. Here are some strategies for navigating this increasingly aggressive network landscape and a framework to help you make decisions that support your agency’s long-term growth and value.
Benefits of a quality agency network
Working with an agency network or aggregator should have a positive impact on your agency’s ability to drive revenue growth and increase its ultimate value. Some agencies are hesitant to join a network because of a bad past experience or think it may take away their independence. But the right network can help them not only grow revenue but ultimately enhance agency value.
There are many benefits to working with a quality network partnership, including benefiting from expanded carrier access with better market leverage, higher permissible loss ratios, and peer benchmarking and performance insights. A best-in-class agency network should act like a strategic partner that can help you build or refine your strategic plan. You may also gain access to technology that streamlines your business and guidance such as producer development and acquisition support. Furthermore, your firm could see increased profit margins and overall agency valuation.
Not all networks are the same
Not all agency networks serve the same purpose and can vary widely in strategy, financial terms and structure. There are premium “clusters” that are focused on carrier volume and enhancing revenue only. In contrast, agency networks could offer support services to help startup agencies get established with strategic planning. Many agency leaders approach network opportunities with assumptions that can be limiting, such as:
- “All networks are the same.” They’re not. Each network varies widely in strategy, structure, support, and financial terms.
- “My agency is too large to benefit.” In reality, even some of the top 100 agencies discreetly leverage networks.
- “I had a bad experience – never again.” Past experiences can be valuable learning tools. Use them to refine your due diligence, not to block future growth.
Network evaluation: Key steps and questions to ask
When evaluating a network, it’s good practice to request an NDA before sharing sensitive business information. Strategies include:
- Speaking with agents currently in the group to understand how the network has enhanced their agency.
- Consulting an attorney to understand the contract terms and how they will impact your agency decisions.
- Requesting specific exit scenarios to ensure you’re comfortable with the separation process.
- Being cautious of first right of refusal clauses that can restrict your agency’s future sale options or autonomy.
- Don’t aggregate carriers blindly. Run a thorough analysis before committing.
- Assessing factors such as permissible loss ratios, non-compete clauses, technology platform requirements, and cultural alignment with leadership values
When engaging with a network representative, consider asking these questions (in writing) and beware of curated references.
- Is the network professionally managed or run by agency owners?
- What are the qualifications, barriers to entrance, and initial cost?
- How will your carrier relationships change? Would you keep your underwriter, attend incentive trips, and work with local leadership?
- Is the fee flat or percentage-based, and how does it scale with growth?
- Are contract terms month-to-month, annual, or multi-year?
- Will I retain ownership of my book? What are the exit restrictions?
- Do they offer training or advisory support around M&A, valuations, and growth planning?
- Am I required to aggregate my entire book of business, or can I aggregate with select carriers I would benefit most from?
Before moving forward with a partnership,fully read and understand the contract terms – they should make you feel empowered, not restricted.Confirm that you’ll retain operational control of your agency and that the network aligns with your strategic vision and long-term goals.
Saying “no” is also an option
Despite the advantages, there may be times when saying “no” to a partnership is the right move. While there are many benefits to joining an agency network, there are also instances where it may be best to reassess. Some potential warning signs that a partnership will not be beneficial include one that involves relinquishing too much control, fees being disproportionate to the value offered, and a network forcing incompatible technology. Other red flags could be exit terms that are murky or one-sided or a lack of data transparency.
In sum, a network partnership can be the difference between a plateaued agency and one positioned for exponential growth. The decision is consequential – approach it with clarity, curiosity, and conviction. Your agency’s long-term value and independence depend on it.
