MGA Vs Cluster

[neb1970]

I know there are 1000 options and varieties out there, but what do the majority of new independent agents that were former captives do to enter the market: partner with an MGA or join a cluster?

What are the advantages/disadvantages of each? A few I can see are with an MGA, you only have to join with them on the carriers you are unable to get direct appointed to, while in a cluster you are sharing commissions on everyone outside of non-standard companies.

Also seem to be less initiation fees with MGA and easier exit strategies, but it appears you typically aren't finalizing policies yourself and instead sending it to your MGA to complete which can add additional time.

I also see a lot of clusters get you your own appointment with carriers, while MGA you are a true sub code.

Just looking at the options of both and people's experiences. I understand a lot depends on the cluster and the individual MGA since there are so many varieties, but just looking for some info.

Thanks!

 

[pacificcrest]

It all depends on which route you want to go. Do you want to become more of a producer for someone that doesn't have much binding authority? Or would you rather own your book of business and have a lot more ability to actually write business?

Being in an MGA limits your ability to have a hands-on approach with clients. The responsibility lies on the business owner/agent. They also reap all of the benefits of the business that you assist on.

Being in a cluster as an agent allows you to own and run your own business with your own appointments. Obviously, with that, there comes a lot more responsibility. With that, comes all of the rewards. The splits are going to be a lot higher commission split.

Obviously, I have an affinity working for an alliance and see the benefits of it over an MGA, but at the end of the day, you just have to decide what role you want to play in the business.