Merging/combining FE/Medicare agency

[scmb]

With the recent trend in the senior market of major IMO’s merging to create a much greater organization, a small/medium agency is going to find it harder to get better commissions and overall financial support.

We can’t do anything to stop those mergers, but I wonder if there’s a way to copy them by combine agencies together and share the increase in revenue from the a higher commission.

Example:
3 difference agencies have 10% commission level based on production capacity separately.

Combined they will have enough capacity to get 11% level, each agency would share the extra 1% based on their respective production.

Is that legal? Has someone done something like that before?

I would only suggest that for experienced agencies with a long track record in the industry.

I foresee some technical issues such as changing IMO’s, accounting calculations.

Would appreciate your thoughts here or privately

 

[DonP]

It's no different than franchising. Franchises want guys who can buy 10-20 units and not deal with 100 guys buying 1 unit. Integrity has huge buying power now and has power over the insurance company. Just like an Hmo pulling out of a hospital network can kill the hospital. Integrity can blackmail insurance co's and demand an exclusive contract were all agents and Imo's are under them. Some of the smaller imo's will disappear.I believe there's been organizations around for a while imo's can join and combine production to get higher commissions

 

[Newby]

It's no different than franchising. Franchises want guys who can buy 10-20 units and not deal with 100 guys buying 1 unit. Integrity has huge buying power now and has power over the insurance company. Just like an Hmo pulling out of a hospital network can kill the hospital. Integrity can blackmail insurance co's and demand an exclusive contract were all agents and Imo's are under them. Some of the smaller imo's will disappear.I believe there's been organizations around for a while imo's can join and combine production to get higher commissions

Not exactly. Franchising is selling a turn key business model. That’s not what Integrity is doing.

Integrity is buying up their smaller competitors to grow rapidly. Similar to what Genworth did a few years ago to grow a large insurance company. And what SCI did in the funeral industry.

There are some advantages to being in a huge group like that but there are also huge disadvantages too. Loss of independence being a major one.

It’s very easy for small agencies and even individual agents to compete against these larger groups. In fact I would say it’s difficult for the big guys to compete with the small guys.

Integrity approached me about opening discussions but I had zero interest. It’s the exact opposite of what I have always wanted for my agency. My goal has always been to have the small agency with every agent a finely tuned sales machine. (It’s the goal, you can never be 100% there.) Not to be a part of something huge and recruiting the masses.

What’s right for some is not right for others. Some of the people that sold their agencies are good people that ran good agencies. So time will tell how it goes.