Is Joining a Cluster Really my Best Option?

[INSUREGEEK]

I can't speak for all, but the offer I got from an SIAA master agency was more like $15K annual to be paid monthly, and I got a generous keep on my commissions and access to all of their SIAA markets when I could DIY the submissions. Help on certain nonstandard submissions, and submissions to carriers NOT in the SIAA crown were more out of my pocket because I needed their name to get them done. I got share of all contingencies and immeasurable resources along the way.

The only reason I didn't do it is I was 100% scratch....no prospects, no captive book to tap in 2 years, no name recognition at all. And I was someone who had all of the experience and skills it would take to open a scratch agency. I just had a family and decided I preferred a steady paycheck from a carrier. Call me smart. Call me stupid. I don't care.

This is not entirely in defense of SIAA. It is intended to illustrate what might be beneficial to someone looking for a home. We are all responsible for our own choices.

 

[F150]

Yes, I am a total hater. You would be too if you paid over 25k a year in fees and you still owe them your first born to get out of the contract.

well, first, why do you want out, and second, its not always SIAA or the name of the cluster, its the local support and help that makes the difference.

You apparently signed the contract, without knowing what was in it?????

 

[scooter33]

well, first, why do you want out, and second, its not always SIAA or the name of the cluster, its the local support and help that makes the difference. You apparently signed the contract, without knowing what was in it?????

I had an attorney review the contract. The problem was the attorney was not knowledgable in the insurance industry, so he pretty much was useless. Also, I was so excited to get started, I didn't do my due diligence. I wish I had talked to more people and knew about this forum before I signed.

I do agree, I think the owner of the local SIAA office does make a difference, however, the guts of the contract are the same nationwide. I finally had a REAL insurance industry attorney review this contract and he said it's the most one sided contract he has seen in his 40 year career.

They get you every way possible.... They get you in the beginning with the "membership fee"' they get you monthly with the splits, and finally they screw you at the end when you sell your book. In the meantime, what they sell you on is BS. Their profit sharing is crap, their support is laughable and "we get you better deals from the carriers".

I am just telling you my experience has been horrible and I very much regret joining. I wish I had someone tell me the cons before I signed my insurance life away with them. If you are drinking the SIAA koolaid, good for you. iT's just not for me.

 

[HealthGuy]

finally somebody speaks the truth about Siaa..Scooter refreshing stuff...thank you..It is the most one sided contract in insurance history

 

[F150]

I can't speak for all, but the offer I got from an SIAA master agency was more like $15K annual to be paid monthly, and I got a generous keep on my commissions and access to all of their SIAA markets when I could DIY the submissions. Help on certain nonstandard submissions, and submissions to carriers NOT in the SIAA crown were more out of my pocket because I needed their name to get them done. I got share of all contingencies and immeasurable resources along the way.

The only reason I didn't do it is I was 100% scratch....no prospects, no captive book to tap in 2 years, no name recognition at all. And I was someone who had all of the experience and skills it would take to open a scratch agency. I just had a family and decided I preferred a steady paycheck from a carrier. Call me smart. Call me stupid. I don't care.

This is not entirely in defense of SIAA. It is intended to illustrate what might be beneficial to someone looking for a home. We are all responsible for our own choices.

get your facts straight, its not a YEARLY fee......

 

[Pacman2012]

I really appreciate this all... I like hearing both sides

 

[shawnmwalker]

Well that went a different direction than I expected over the weekend.

The truth is, there are good, better, and best groups out there. I have great friends who belong to SIAA as agents and good friend who own SIAA master agencies.

Always remember Pacman, All groups should deliver four things:

1. Transparency.
2. training and support
3. Carrier Alignment
4. Contract

Agents make mistakes when they discount the first three factors. I don't blame them because they are harder to define due to their Qualitative nature. They jump to the Quantitative variables of the contract. (Rightfully so- its easier to define, and makes up the largest part of the decision)

Slow down ask questions. Talk with someone who helps you ask the right questions. Talk to someone who won't let you through the process without stopping you when you miss questions. Some groups prey on agents who don't know the questions to ask. Know all of your questions will boil down to the four categories listed above.


One other thing. F150 has a great point. The Correct choice in aggregator has many more benefits than what most see as the benefit of belonging to a group.

 

[Verbgravy]

This thread is bananas. There is some good information in here, but like many other threads around here lately, it's become bogged down by embittered agents and sales pitches.

Sorry, but this is going to be long.

You don't need to join a cluster, but it will be your quickest route to financial success. Being new to the IA side, you don't even know all of the reasons to join the RIGHT cluster for you. research them all and understand the contracts. You will NOT get the market access you need on your own. Most carriers will turn you down or require large volume commitments, which will limit your ability to add multiple carriers at large commitment levels. Writing a bunch of non-standard auto for low premium that has requires a bunch of non-pay calls to keep their $30 commission coming in is a hard way to survive.

You're not just handing $10 or $20K to most clusters to get started. I researched all of my available options to include SIAA and I ultimately chose to go with Pacific Interstate Insurance Brokers I'm based in AZ. I simply took what was important to me and found the best fit. I will say that I looked at the website, but I was kind of turned off by PGI's approach on this forum. I hope you don't take offense Shawn Walker, I just wanted to offer the feedback. This is not an advertisement for PIIB, I just want to be up front about my experience. I was concerned about:

1. Market Access/Direct appointments
2. Ability to terminate the agreement
3. Profit sharing and overrides
4. Cost
5. Ability to obtain direct appointments outside the cluster

In that order. I found the relationship that offered me the best of those things and went with it. In order to understand how you benefit from a cluster, you need to understand how IA compensation works. I think that's one area you really need to research OP. First dollar profit sharing and substantial overrides make all of the difference for me. I get a 90/10 split on all profit sharing. Yes it's a split, but I get instant profit sharing with ALL of my carriers, when I wouldn't even qualify for profit sharing on my own. I'm not letting any secrets out here, it's all on their website.

The benefits you don't think about are huge too. Great example, I wanted to enroll my new producer in to a 12 month development program offered by Chubb that cost $2500. Due to the fact that I'm part of a cluster, even though I have a direct Chubb code, I've never placed business with them, I'm still considered a "Cornerstone Agency" and am able to send my producer to the course for free. They just waive the $2500. That's an investment in my agency that costs me nothing more than what I'm already paying.

I pay a flat $850 to my cluster. I make far more than that from the 5% first year, 3% renewal override I get from one of my large, directly appointed personal lines carriers. I paid a $2500 initiation fee too.

I opened my doors with ZERO customers and at least 8 direct appointments to include Safeco, Travelers, Hartford, Mercury, Progressive, Chubb, and countless master agency access for commercial and specialty lines. The largest volume commitment I had to make? It was $50K in the 1st year. Some carriers didn't even ask for a volume commitment. My COMBINED volume commitments are less than what you'll make to one carrier.

If I need help with a risk, I simply send an email out and get immediate responses from other agents in my cluster.

If I choose to terminate the agreement, I simply give notice, pay them no fees, and it's business as usual. As long as the carriers want to keep the relationship, I can keep all of those as well. A time might come when my agency could outgrow the cluster relationship, but I think for the profit sharing benefits alone, I'll always be a member.

You can do it on your own, but it'll be a lot harder and take longer.

Anyone feel free to PM me if you have questions. I wish someone would have laid it all out for me.

 

[shawnmwalker]

VerbGravy,

I am not offended. I hope PIIB is a great fit and works well for you for many years. I would love a PM from you to hear what it was on the forum that was interpreted as the wrong approach.

As for some of the things you mentioned about your contract you enjoy, PGI offers many of the same benefits.


You do offer great advice. Figure out what is important to you. Find a group that offers that. Slow down, do your home work. The $850 monthly Payment might buy you certain things that you are willing to pay for in a format you are willing to pay in. Those things and the format in which you pay might be important to you, it might be all wrong for another. When I talk to agents we talk about the benefits of all the aggregators they are courting as well as agents their needs and wants.

 

[Einstein]

I am not much of a poster on these forums, just a lurker but thought I would chime in regarding this SIAA topic. To the SIAA haters, as an IA myself, ask that you:

1) Please please please, don't join SIAA because if you do you would become a stronger agency which would translate into stronger competition and my agency doesn't need anymore competition. Go ahead open up your P&C office and call Nationwide, Liberty Mutual, Hartford, Travelers and others asking for an appointment and report back as to which happened first:

A) They hung up on your even before you spoke your name.
B) They laughed at you when you told them you were a superstar agent and you can walk on water and you would produce $1 million in premium per month.
C) They said "We are not appointing in your area at this time - translation get lost" even though they just appointed the agency down the street from you.
D) They said "Call us back in 3 years..." but inside they were really thinking to themselves "LOL, statistically speaking this guy won't make to 3 years, poor dude .

2) In the same lines of making the competition stronger, you wouldn't want to make SIAA even bigger than they already are right! Think about it, they already have 5,000+ agencies signed up. And of course, I AM SURE AND POSITIVE that all those 5,000+ agents are really stupid and naive and they all must be living below the poverty line making $100,000+ income. Just can't believe how stupid those guys are really! (Inserting sarcasm).

3) You also would not want SIAA to grow their written premium count right! They already have a combined written premium of over $5 billion (that's billion with a "b"). Which by the way $5 billion is the size of many of the well known insurance carriers in the US today so 5 billion is yes, massively big.

So yes, SIAA sucks and please don't join them. Stay a small agency as I love to compete with agencies that have 3 or 4 carriers for a risk and I show up with 16+ well known carriers and hit it out of the ballpark. Feels so good!