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Today's Viewpoint: A MarshBerry Publication

Insurance carriers are reevaluating their distribution strategies. They are increasing their production requirements, reducing resources offered to agencies and brokerages, and making it more difficult to maximize compensation. These factors not only put additional pressure on firms for production, but they can make it difficult for some to maintain carrier relationships and gain new appointments.

Firms are increasingly turning to aggregation models to ease carrier pressure, gain carrier access, and earn enhanced compensation. While aggregation is not new, options for aggregation have evolved with many misconceptions recently addressed in Myth Busting: Aggregator Perceptions.

If you’re exploring an aggregation model for your firm, consider the type of aggregator that best meets your needs and defines your goals. Do you need new carrier markets? Additional resources? More compensation? Peer-to-peer idea exchange? 

Types of aggregation models:

  • Market Access: Provides access to carriers and other markets and typically operate as a managing general agent or wholesaler.
  • Clusters: Collection of firms operating as an alliance or partnership that pool premium through individual carrier contracts. Production, compensation and loss experience are aggregated.
  • Aggregators & Networks: Usually privately-owned entities that provide scale, shared resources and peer networking. These groups accept agency members, or their members have equity stakes in the relationship.
  • Combination Groups: Mix of the above and typically offer a combination of market access with an aggregation network model.

Determine your firm’s goals as they relate to these categories:

  1. Costs: Understand the fee structure and the process for joining the model of your choice. The initial costs and the ongoing monthly costs can vary dramatically. The key is to understand what you get in return for the payments. Do you gain carriers, resources, additional services, or technology? Some models include a management system with their fee structure. Consider your current expenses for services and technology that may be offset by those included in an aggregation model.
  2. Direct or Indirect Access: Agencies and brokerages value their carrier relationships and you should understand how your relationship will be impacted. For instance, does the model allow you to maintain these relationships? More importantly, do you maintain direct carrier access to place business, or do you need to place your business through the program? Be sure to consider access for both existing and new carrier relationships. For instance, will you have direct access with all carriers or only certain carriers? Are there requirements for access? Many groups limit access until your firm achieves a pre-determined premium level before earning direct access. Ask if your firm’s name is on the policy or the group’s name as well as access to service policies.
  3. Ownership: Understand if a member owns all policies (if any) or only those with direct access. While this may seem simple, it will often be determined by direct vs. indirect access.
  4. Compensation: How the group treats compensation is a critical component in your analysis. Do you earn commission directly from the carrier? If commission is from the group, how is it paid? What rate do you earn? Do you earn bonuses with all carriers? How are bonuses calculated – on your agency production or aggregated with the group? Are you eligible for incentive trips with carriers?
  5. Exit Strategy: Possibly the most important consideration is what happens if you decide to leave the group. Some firms may evolve beyond the capabilities of the group and others may decide to merge or sell. This is another category that dramatically varies between groups. Some models allow exits with short notice and no penalties or fees; other groups may impose time commitments, significant penalties and fees, non-competes/access with carriers the group provided, or a combination of these factors.

Each aggregator model offers many partner options. Determining the partner that fits your goals requires in-depth research. Approach this research as you would with any long-term relationship. Be prepared to ask many questions and discuss the details. Request references of firms who work with each partner to ask about their experience.

An aggregation model will provide you with carrier relationships, additional resources, enhanced compensation, and a community of peers. Doing your research and asking the critical questions will help you select the right partner to achieve your goals.

If you have questions about Today’s ViewPoint or would like to learn more about 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 blog for the latest news and updates and follow us on social media.  


1ACInsiderMarshBerry 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. 

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