Buying a Independent Agency

[Redd]

If I buy a existing agency, would I still need to join a cluster group?
There are at least three companies that I would need to add to the agency. The agency has been in business since the 80's and has about 1500 PIF. I have worked for independent agencies since 2013.

 

[Brokerlikeaboss]

Not necessarily. If you can get the carrier to directly appoint you and you have the ability to meet their sales numbers, then you wouldn’t need a cluster. Typically, clusters aren’t giving you many “hard to access” carriers. It would be the Safeco, MetLife, Hartford, Travelers, Etc. The benefit to them is you wouldn’t have to hit the sales numbers you’d otherwise have

 

[Brokerlikeaboss]

Only 1500 policies would concern me though. Especially in a 40 year old book

 

[Markthebroker]

Only 1500 policies would concern me though. Especially in a 40 year old book

You have a point, but I write commercial only, and based on my average policy premium, a 1,500 policy book would be approx. $6.4mil total premium. Not too bad.

 

[Redd]

The agency has been in decline for many years. The owner just not marketing the business as he should. If the existing business can cover the note and expenses, I will move forward with the purchase. If I was starting without a book of business, I would sign up with TWFG. But since this agency has a book, what do I get for handing over 20% of my business?