Franchise vs. Aggregator vs. Cluster: What’s the Difference for Agents?
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Running your own insurance agency can be liberating but also complicated. Between carrier access, marketing, and compliance, independent agents often hit a wall. That’s why so many turn to support models like franchises, aggregators, and clusters. But which one actually helps you grow?
While each model has its place, today’s most scalable agencies often align with a structure that offers both independence and infrastructure.
When discussing insurance agent models, the first main difference centers around whether you’re a captive agent or an independent agent.
Captive Agent Models: Dependent by Design
Captive agents represent a single insurance carrier. The exact arrangement depends on the carrier in question. In some setups, they are regular employees who receive a salary, possibly along with modest commissions. In other setups, they are independent contractors, and they may run their own agency and earn commissions. However, the carrier still typically retains ownership of the book of business.
Captive agents may receive a lot of support from their carrier, and they benefit from the carrier’s marketing and brand recognition. This, along with the fact that they only have to learn one carrier’s system and product offerings, can make things easy for agents. However, in exchange for this, agents give up autonomy. They also lack access to products from other carriers, which can make it difficult or impossible to help certain clients. If the carrier decides to pull out of a line of business or region, agents may lose their market.
Many agents start out as captive agents but then make the switch to independent agents once they’re ready to branch out.
Independent Agent Models: Freedom with Challenges
As an independent agent, you can represent multiple carriers, giving you flexibility to find the best insurance solutions for your clients and to pivot when the market changes. You earn based on commissions, so the more you sell, the more money you make. The potential for growth and income is tremendous. However, gaining access to top carriers can be challenging for smaller agencies. Many independent agents also find they need help with marketing, training, technology and the other aspects of running an agency.
To overcome these common challenges, some agents join an insurance franchise, cluster or aggregator. Wondering if one of these models could be right for you? Below, you’ll find an overview of each approach to help you compare your options.
What Is an Insurance Franchise? An Independent Agent Model
Franchises are a popular model in the business world. For example, McDonald’s restaurants leverage a franchise model. If you want to own a McDonald’s restaurant, you have to pay the franchise fee and meet the brand’s other requirements. In exchange for this, you get to open a store using the popular and trusted McDonald’s brand, and you also have access to the McDonald’s system, including the training and guidance that they provide.
An insurance franchise operates on the same basic principle. You run your own insurance agency, but it’s part of the insurance franchise brand. By buying into the franchise, you secure major support for your agency, which can include training, marketing, technology and carrier access.
What Is an Insurance Aggregator? Insurance Franchise vs. Aggregator
An insurance aggregator gets its name because it aggregates multiple insurance agencies. This is done to gain leverage. Alone, the individual agencies may not have enough bargaining power to negotiate with carriers, but combined, they are stronger.
There are usually fees associated with joining an aggregator, as well as commission splits, and there may be strict requirements that you need to meet before you can join. However, there’s a lot of variation from one aggregator to another.
What Is an Insurance Cluster? Insurance Clusters Explained
Insurance clusters are similar to insurance aggregators. In fact, some people use the terms interchangeably, along with the term insurance network, and definitions can vary. However, clusters may be more limited in scope, often focusing on specific lines or operating in small regions.
As with an insurance aggregator, there may be various fees associated with membership, and there may be some requirements to meet before you can join.
What’s the Best Model for Insurance Agents? Aggregator vs. Cluster vs. Franchise
If you want to join a network, aggregator, cluster or franchise, you’re probably wondering – which model is best for agents? If you ask different people which insurance model is the best, you’re going to get different answers.
One reason for this is that personal preferences vary. For example, some agents may want complete control over every aspect of their agency, even if it means they have to work much harder. Other agents may want an easy option, even if they have to give up some autonomy.
There are also major differences within each category. Some aggregators may have costs that cut into your ability to make a profit as well as contract clauses that make it difficult to leave, while others may have fairer costs and better contract terms. Likewise, franchises can also vary. Some give agents access to cutting-edge technology platforms and attractive commission structures, while others don’t.
The following chart provides a broad overview of how these models generally stack up. When comparing your options, be sure to look at the details as contracts within each category can greatly vary.
| Cost/Revenue | Autonomy | Ownership | Support | |
|---|---|---|---|---|
| Franchise | Pay a franchise fee and receive commission splits to gain access to the franchisor’s growth engine. | You run your own agency under the franchise brand. | The agency operates under a unified brand. The book typically belongs to the franchisor, allowing centralized servicing and compliance. | Often very comprehensive, including marketing, servicing, technology and carrier appointments. |
| Aggregator/Cluster | Pay various fees and receive commission splits, and growth is based on what the individual agent can sell and service. | Agencies keep their name and brand. | Agents typically retain book ownership, but there may be exit fees and noncompete clauses. | Varies, but may be limited to carrier appointments. |
| Captive | Receive salary and/or commissions, and growth is limited to demand for the carrier. | You are tied to the carrier and bound by its rules and products. | The carrier typically owns the book of business. | Usually very comprehensive. |
The Mavrix Franchise Model
Mavrix offers a unique franchise model that gives you the partnership, platform and power to scale without limitations.
As a Mavrix franchise owner, you’ll benefit from a cohesive tech stack, a dedicated service team and direct access to top-tier carriers. With all these advantages, you’re free to focus on selling. It’s ideal for agents who want to be independent but don’t want to do everything alone.
