The hard questions · A due diligence guide

10 questions to ask before you sign anything.

Upfront fees. Commission splits. No profit sharing. Lack of ownership. These are the hallmarks of most cluster programs in the market today, and the reason so many agency owners find out too late what they actually signed.

If you are considering joining an agency group, you must understand the most critical program aspects and ask the right questions, so you don't end up making a costly mistake.

How can you make an informed decision before taking the plunge?

Start by asking these 10 crucial questions. And here is how ISG United answers each of them.

Is there an upfront charge, and if so, what does it cover?

It is typical for groups to charge upfront fees. However, if those fees are anywhere north of $5,000, then it may be time to look elsewhere. A group will incur real costs onboarding new agencies, but there is a point where the fee becomes unreasonable for the services provided.

There is a point where the fee becomes unreasonable for the services provided.

Look for: A group with no upfront fees.

Most groups say

A one-time initiation fee of $5,000 to $60,000, framed as onboarding, technology setup, or licensing.

ISG United answers

$0 upfront. Ever. Every dollar you spend goes toward growing your agency, not paying for the privilege of being here.

Are there monthly fees? If so, what do they cover?

Many groups charge monthly fees. Sometimes those fees cover a minimum needed to run the group at the management level. Other times they cover technology requirements mandated by the group. Monthly fees can be reasonable, but you need to ask what they are and why they are charged.

Monthly fees can be reasonable. But you need to ask why.

Look for: A flat, predictable monthly fee.

Most groups say

A variable monthly fee that grows as your book grows, plus assorted technology surcharges.

ISG United answers

A flat monthly fee. Fully predictable. Never scales with your revenue. Never grows because you grew.

What is the commission split?

Most organizations make money by splitting commissions with their member agencies. Do the math. At $150,000 in annual commissions, a 20 to 50 percent split costs you $30,000 to $75,000 per year, forever.

$30,000 to $75,000 per year. Forever.

Look for: A flat fee, not a split.

Most groups say

20 to 50 percent of commissions, forever, on everything you write through the group.

ISG United answers

Zero split. In most situations, you keep 100 percent of your commissions, direct deposit from your carriers to your agency.

If there is a commission split, am I required to pay you on business written outside the group?

This may seem outlandish, but make no mistake, it is common practice. According to their contract, many groups require a cut of any business written with carriers outside the group. Some groups will not even allow you to write with carriers not on their platform. Read the contract carefully.

It may seem outlandish. It is common practice.

Look for: No claim on outside business.

Most groups say

Yes, a percentage of all business you write, even with carriers outside the group.

ISG United answers

No. ISG has zero claim on anything you write outside the network. Direct appointment, personal contract, all yours.

Do you offer profit sharing or carrier bonuses?

A common scenario: a startup independent agency joins a regional MGA on an 80/20 split, receives zero profit sharing, and because they came from a captive background, they never even ask about carrier bonuses. Retaining a portion of carrier bonuses is fair for any group, but 100 percent to ownership and 0 percent to you is greed.

100 percent to ownership and 0 percent to you is greed.

Look for: Bonuses shared with the agencies that produced the premium.

Most groups say

The group keeps most or all of the carrier bonuses. Zero to the producing agencies.

ISG United answers

Up to 75% returned to the agencies that produced the premium. $2M+ distributed to members since 2018.

What happens when I want to exit the group?

Agency owners get excited about joining and forget to ask about leaving. The most common exit fee is 30 percent of annual revenue. On a $3M book with $375,000 in annual revenue, that is $112,500 to walk away and keep your customers. Some agents take out six figure loans to escape their cluster contract.

Some agents take out six figure loans to escape their cluster contract.

Look for: A low, flat exit fee and no forced sellback.

Most groups say

A large exit fee, often 30 percent of annual revenue, plus forced sellback provisions.

ISG United answers

A flat, low exit fee. You keep your book, your carrier appointments, and your agency.

If I want to sell my agency, can I do that on the open market, or do I have to sell it back to the group?

Requirements to sell back to the group have become more common in recent years, especially in franchise arrangements. Some require selling back for a ridiculous 0.75 x annual revenue, versus the 2.5 x factor on the open market. This is an insult to an owner who has worked hard to build a business.

An insult to an owner who has worked hard to build a business.

Look for: Open market sale rights.

Most groups say

You must sell back to the group at a below market multiple, often 0.75 x annual revenue.

ISG United answers

ISG United provides a path where you can easily sell your book of business on the open market.

Do I have binding authority with the carriers?

This comes up most in MGA and franchise arrangements. Without binding authority, you have to request approval from the home office of the group. That delays business, and delays lose business. You want the ability to quote and bind immediately.

Delays business. And delays lose business.

Look for: Immediate binding authority.

Most groups say

Binding authority requires home office approval, adding hours or days to every quote.

ISG United answers

Binding authority on every carrier you are appointed with. Quote it, bind it, move on.

Am I required to put the group's name on my signage and marketing material?

This may not be a big deal for you, or it may be a deal breaker. Will you be marketing your agency's name, or will you be required to display the group's name on your door and business cards? Ask the question before you sign.

Whose name is on the door?

Look for: Your name, not the group's.

Most groups say

The group's name on your signage, business cards, and marketing materials. Your name is secondary.

ISG United answers

Your agency name on everything. Your door. Your business cards. Your marketing materials. Always.

How does your organization make money in this arrangement?

Greed abounds in this sector of the industry. Ask this simple question to gauge any level of it. If you get pushback, it may be time to move on. If the answer is clear, direct, and put in writing, you have probably found a winner.

If the answer is clear, direct, and in writing, you have found a winner.

Look for: A transparent answer, in writing.

Most groups say

A vague answer that avoids the specifics, or pushback that the question is inappropriate.

ISG United answers

We charge a flat monthly membership fee. That is our revenue model from members. The number is on our website. It is in the contract. That is it.

Scorecard

The entire argument for ISG United, on one page.

Industry standard

0 out of 10

ISG United

10 out of 10

Not all agency groups are bad. In fact, once you find a group that is fair and transparent, there are many benefits to joining one. Just exercise caution, and don't be afraid to ask questions. If someone is trying to hide something from you, they will get nervous when you start asking questions. If they welcome your questions and answer them thoroughly before you make any decisions, you have probably found a winner.

Keep Going:

How Our Contract Compares to a Traditional AggregatorThe Answers We Give on Every Call.

Ask the hard questions · We have the answers

Ask us the hard questions.

No upfront fees. No commission splits. No agency name requirements. True ownership and profit sharing for every member agency. And when you book the 20 minute conversation, you talk to a founder or partner, not a recruiter.

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