Thu. Jun 20th, 2024


There are roughly 40,000 independent insurance agencies currently operating in the U.S. Of that number, slightly less than half of those businesses are members of an agency network.

As an independent agency principal, it’s likely that by now you’ve either already made the decision to become part of an agency network, or you’re wondering whether joining one is worth the cost of membership – and exactly what you should expect in return.

A common question becomes: for my business, is joining an agency network worth the investment?

The answer depends, in part, on your agency’s needs. The value derived from a network is determined directly by its ability to meet the strategic priorities of your business.

What Should I Receive for my Membership Fee?

The first thing to recognize is that when it comes to agency networks, you get what you pay for. Most networks will typically offer you member benefits that are primarily focused on market access and increased compensation for your book of business.

At a minimum, that value should be quantified via two key deliverables: a marked increase in overall revenue growth (commissions on new premium written and enhanced compensation on the business you write) and quantifiable gains in agency efficiency (streamlining processes that will empower your agency to identify trends and serve more customers in less time).

In addition to market access, your agency’s increase in overall revenue should be driven by:

  • Alignment with your network’s carrier partners
  • Placement services to assist you with the expertise needed to market new risks, and
  • Agency technology tools designed to help your agency see opportunities and improve retention and new business

Agency technology solutions help put all of your customer information at your fingertips and identify new sources of revenue for your business. Agencies looking to better cross-sell their clients, for example, are better equipped to do so when they can see all of their customers’ policy details in a single, digital view.

Your agency’s gains in efficiency, meanwhile, should be powered by two things: more bandwidth for your agency to handle time-consuming back-office tasks, and business intelligence tools that allow you to maximize the value of your data.

At the end of the day, as the agency’s owner you should always feel like your business is receiving a wider spectrum of value from the network you select. Not all agency networks will provide you the same member benefits.

Will I See Results Right Away?

Many agency principals would wonder, exactly how does the investment in a network pay dividends, and how long will it be before it begins paying off?

The degree to which membership in an agency network provides a return on your investment depends greatly on how much the agency takes advantage of the benefits provided, as well as the value of those benefits.

Consider the network “lift” offered by enhanced compensation for the business your agency already writes. Part of the advantage of joining a network is the financial benefit gained by aligning with the network’s carrier partners, so that your premium contributes to the network’s collective bargaining power.

In truth, if your agency’s carrier partners do not align with the network you’re considering, that network may not be a good fit for your agency.

Conversely, if the business you have placed with your current carriers lines up well with the carriers of your network partner, the financial gain your agency can experience is limited only by the amount of premium you have with those common carriers.

Membership with a network can also do much to insulate you against market fluctuations during which other agencies of your comparative size and book won’t earn very much in profit sharing.

The composition of your book of business must also be of interest to the network you’re considering and, by extension, its host of carriers. (A book weighted heavily in personal lines, for instance, might not have the same appeal in 2024 as an agency that focuses heavily on commercial accounts with good loss history.)

What Member Benefits Should I Look for?

All agency networks are not created equal, which is to say that not all networks will offer the benefits your business needs.

Networks that offer placement services, for example, can help you write more types of risks than you could on your own – and having a dedicated Growth Advisor (who works with you to accelerate your agency’s business through a customized plan) provides a distinct advantage over other agencies. The financial rewards gained through both of these benefits can often offset the cost of your membership fee.

Likewise, marketing your agency can be a time-consuming endeavor; success in this area can elude you without being able to utilize powerful tools to best tell your agency’s story. Among those solutions is Maestro, Renaissance’s automated e-mail marketing system. Through Maestro, we work with our members to craft customized e-mail campaigns that enable you to stay connected with clients and prospects and aid in your cross-selling efforts.

Other marketing resources that can be leveraged by member agencies include web site creation and fine-tuning, search engine optimization, and assistance with social media marketing.

Additionally, a network that enables you to offload your most time-consuming, tedious tasks such as billing and invoicing will give you time back to focus on selling and help your agency make strides instead of falling behind.

How Will I Know My Membership Fee is Worth What I’m Paying?

In most cases, an agency belonging to a network has to calculate on its own whether it’s seeing enough return on its investment. Renaissance, on the other hand, tabulates a value assessment clearly showing the value delivered to each member agency – both before you join and afterward.

When delivering our sales proposal, Renaissance shares with you your agency’s projected gains within your first year of membership, net of your membership fee. This forecast is developed during an in-depth assessment in which your projected increase (including your estimated enhanced compensation, value gained through our suite of services, and other benefits) is calculated.

After you become a member agency, Renaissance’s annual Value Attribution summary outlines the specific, measurable value (revenue growth, expense savings, or both) that our network delivers to your business across our differentiated products and services.

Each year, the member agency’s Value Attribution report is summarized and presented by their Member Success team as part of the member’s Partnership Review. In these reports, each agency will see their unique “Total Value Attribution” number (on average, two to four times their member investment), which summarizes all the revenue growth and expense savings generated by their utilization of Renaissance products and services.

Why Self-Analysis is Key

In the end, the decision to join an agency network should be driven by your agency’s needs. As the owner, reflect on which member benefits your agency could leverage that would deliver revenue and efficiency. What’s most important to you? What are the changes to your business that you’d like to see? Would the financial gains from an agency network be greater than what you’d be paying for membership?

Once you have answers to those questions, you’ll be empowered with the knowledge of what your business requires most to excel – and the benefits that the right agency network would provide to help you achieve your goals.



Source link

By admin

Leave a Reply

Your email address will not be published. Required fields are marked *