Going independent, cluster or direct contracts? Background/ Questions

[Agent 0]

Background:

My father has a P&C book of business and is currently a captive agent with Farmers. I have a health book of business that I've been growing on my own for the last two years and I would've likely done things a little differently with my contracts if I had known what I know now so I want us to do our due diligence before making a decision. We are going independent on the P&C side shortly and are trying to decide between going with a cluster or trying to get direct appointments with carriers.

Some questions:

1. Most clusters collect a percent of commissions and bonuses, do they also get overrides?

2. How hard is it to get/ maintain contracts when you go through a cluster vs. not going through a cluster? Clearly joining a cluster will help you get contracts but my dad also thinks that going through a cluster is safer in terms of keeping contracts and not getting terminated.

3. Is it harder to maintain/ grow a commercial/ P&C book of business if you get direct appointments as opposed to going with a cluster?

4. We have talked with an independent agent who went the direct contract route and he only has 4 or 5 contracts. Is this a typical number of contracts? More is usually better but would we be losing a lot of business by not going with a cluster?

Thank you:

This is a tough decision and I appreciate any advise anyone is willing to give.

If there are any question you may have for me or any questions we should be asking that we're not please let me know.

 

[marindependent]

1. Most clusters collect a percent of commissions and bonuses, do they also get overrides?

Do they get overrides? Or do You get overrides? You have to ask the cluster this question and its a good one.

2. How hard is it to get/ maintain contracts when you go through a cluster vs. not going through a cluster? Clearly joining a cluster will help you get contracts but my dad also thinks that going through a cluster is safer in terms of keeping contracts and not getting terminated.

It is typically easier through the Cluster, but not always.

3. Is it harder to maintain/ grow a commercial/ P&C book of business if you get direct appointments as opposed to going with a cluster?

It is often easier to get the commercial appointment than it is with the personal lines appointment. But not always.

4. We have talked with an independent agent who went the direct contract route and he only has 4 or 5 contracts. Is this a typical number of contracts?

Totally depends on the sistuation. Size of Book, type of Book, etc.

Look - this is not a Either Or Scenario. You are going to have both Cluster Appointments and Direct Appointments.

What state are you in? [Are insures appointing actively in your state right now?] Are you going to be more Commercial or more Personal Lines? What is your focus?

Don't do a contract where the cluster requires all business through them.