INSURANCE CLUSTER ADVANTAGE

Key advantages of using an insurance cluster vs. insurance wholesaler

• When placing business through an insurance cluster with direct access to quote and bind, you can write both personal and commercial insurance much faster than through a wholesaler. For both personal lines and small commercial, you must be able to write a high volume of policies quickly to have any success. Working with an insurance wholesaler could delay simple transactions by 24 to 48 business hours. Also, for large commercial policies, you can gain a significant edge from being able to quote and bind faster with direct access to carriers through the insurance cluster.
• Insurance clusters offer much higher compensation than wholesalers for the same exact policies and carriers. When you write business through a wholesaler, it is a slow and manual process. Wholesalers also charge an additional broker fee, taking a cut of commissions to cover the cost of quoting, binding, and processing certificates and endorsements. But when you partner with the right insurance cluster, you can often keep all the new business and renewal commission. When you are the one doing 100% of the work, the cluster can afford to pay out 100% of the commission–in addition to overrides, growth bonus, and profit-sharing. Insurance wholesalers will not do this for you.
• You can provide better customer service and products with your direct access through an insurance cluster. When dealing with a wholesaler, you will not be able to bind or process any changes for the client during weekends or evenings. And because wholesalers charge their own broker fees on top of the your own, clients may become confused and unhappy with being charged two separate broker fees. Wholesalers may also use non-admitted carriers that provide less coverage or use policy forms that are not standardized. These policies may also involve premium financing, which can result in high-interest payments–an additional cost for the client.
• You’ll have difficulty selling your book of business written through a wholesaler. When purchasing a property and casualty insurance book, buyers want to see loss ratio, retention rate, and production reports from the carrier. If your book is with a wholesaler, these reports may be unavailable. As a result, it becomes difficult to assess the value of your book of business. When your book is with an insurance cluster, you’ll often have your own sub-code or sub-appointment, allowing you to access that loss ratio, retention rate, and production report generated by the carrier with your name on it–all details that provide value to a book of business. These reports provide credibility when you apply for additional appointments. Most don’t realize these reports serve as the credit score for the property and casualty industry, allowing you to sell your book one day in the open market.
• To become a successful agent, one must build a relationship with carrier underwriting. But with a wholesaler, it is nearly impossible to build that relationship–you have no opportunities for direct communication. With a wholesaler, underwriting may not even know the actual writing agent’s name. Without that line of communication, how can you properly represent your client? By working with an insurance cluster, you’ll be able to interact with underwriting directly to discuss your accounts.