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Why Agency Aggregators Are a Valuable Option for Large Insurance Agencies

The staff of a large insurance agency gathers for a meeting.

Once a favored option for smaller independent agencies, agency aggregators provide significant value that mid-to-large size agencies are now finding hard to ignore.

For decades, it was commonly accepted that larger insurance agencies had the staffing and capital to serve their clients efficiently, and the premium levels to provide them leverage while negotiating with carriers. To them, agency aggregators were something relied upon by smaller insurance agencies.

Over time, however, sea changes in the insurance industry have altered the correlation between an agency’s size and its need for resources – and insurance agency principals have become increasingly aware that the game has changed. Particularly in the past five years, smaller agencies aren’t the only ones that view insurance agency aggregators as a solution to their needs.

Agency aggregators gain steam

Access to carriers, talent, and technology are the three competitive differentiators among independent agencies, regardless of their size – and the larger players who once seemed to corner the market in these areas are discovering that persistent trends of increased consolidation in the P&C industry have altered the playing field.

Wider consolidation at the carrier level has fostered an environment in which scale now matters more than ever, and agents know that carrier consolidation often breeds aggressive revenue targets that independent agencies are obligated to assist in meeting. Larger agencies with business spread among several key carrier partners face a conundrum in which they may write sizable amounts of premium, but those accounts end up spread too thinly among multiple major insurers eager to grow revenue.

As a result, larger agencies have become more challenged in meeting their premium thresholds. The P&C marketplace now is such that even $40m agencies have trouble maximizing their enhanced compensation. They can’t feed their carrier partners enough volume to move to higher payout tiers.

It’s ironic that today, some of the biggest agencies are under more pressure than they have in years to deliver results – a burden their smaller competitors are all too familiar with.

Additionally, consolidation at the agency level has been steamrolling – a trend that shows no signs of stopping. The past five years have witnessed the most active M&A market in history.

Download our free e-book here: The Independent Agent’s Playbook for Success – How to Solve Your Agency’s Five Biggest Challenges 

Even at those levels, consolidation isn’t the only factor influencing larger agencies to consider an agency aggregator. The commoditization of personal insurance has driven many savvy agencies to focus on commercial business – and any agent knows that in order to succeed in that arena, you need the right carrier partners.

Technology remains a challenge for agencies at all stages of growth. In order to serve clients quickly and effectively, new tools are needed – and the bigger the agency, the more expensive those investments become. Guidance is needed to ensure that the solution the agency plans to implement does precisely what it’s supposed to, and that it won’t become obsolete before long.

Personnel is another challenge: the insurance industry is hardly immune from the effects of the Great Resignation of 2021. For agencies of all sizes, the employee turnover rate has grown to 20%, according to Vertafore’s survey report “The Insurance Agency Workforce: Evolving into the Next Normal.” At the agency level, specialization in select lines of business is prized more than ever, and those experts can now command higher salaries.

It’s no longer enough to be a large agency. Bigger fish are circling, and in order for larger players to maintain their influence, those organizations are actively considering their options for adding resources.

Keys to the Future

Joining an agency aggregator is no longer being viewed by larger agencies as a defensive position. It’s a strategy built on offense, that empowers them with improved, fixed compensation, and better terms negotiated on their behalf by a trusted partner.

In 2022, even large agencies need a boost to help them punch above their weight class and stay in the ring. Aggregating their premium a network can help elevate them to higher payout tiers, and the technology and people delivered by well-equipped agency aggregators – as well as access to commercial lines markets and expertise in select lines of business – can drastically alter the performance of even the biggest independents.

Renaissance is more than an agency aggregator. We work with the owners of P&C agencies of all sizes to provide you the people and technology for your business to thrive while remaining completely independent.

While you maintain 100% control of your agency, we deliver reliable, consistent revenue through fixed overrides, growth bonuses, higher commissions, and enhanced profit sharing in addition to expanded carrier access to technology, back-office support, and other valuable resources.

Contact us to learn more about how your agency can not only maintain its status, but to grow stronger while ensuring its future.

About Renaissance

Renaissance provides market access, placement services, technology and resources for independent insurance agents that want to grow their business and maximize efficiency.

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Renaissance is a good fit for independent insurance agencies that:

  • Have a positive loss history
  • Have a strong desire to grow commercial lines
  • Are led by a licensed and experienced P&C insurance professional
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