New Association for Insurance Agency Networks Forming

An insurance industry lender is among those touting a new association for insurance agency networks.

The lender, Live Oak Bancshares Inc., says it will not have ownership in the new group, Insurance Networks Alliance (INA), but will be an ongoing sponsor.

Live Oak said the association is meant to represent and strengthen insurance agency networks as part of the independent agency distribution channel.

Exact membership criteria and other rules are still being worked out.

Kelly Drouillard, general manager of Live Oak’s insurance lending business, told Insurance Journal that the idea for INA but came about after she and Michael Strakhov, executive director of Live Oak’s insurance lending, wondered what existing industry groups were meeting the needs of agency networks, aggregators and clusters.

“We thought, ‘Where do these guys hang out?'” she said. “They don’t go to the Big I [independent agents] events. They don’t go to AAMGA [American Association of Managing General Agents]. They aren’t really part of the state association of agents. There really isn’t a platform or group in the insurance industry that addresses the opportunities and needs of that particular distribution model.”

INA’s mission is to create “a forum to collaborate” with industry partners. “Our goal is to work together for productive relationships with carriers, associations, channel partners and peers to evolve the collective value of insurance networks,” the group says on its website (www.networksalliance.com).

Drouillard and Strakhov set up a “think tank” meeting in September 2016 at Live Oak’s headquarters in Wilmington, N.C., where five agency network CEOs brainstormed for a day and half.

“We did a couple surveys, one to carriers and another to networks, to identify places where there may be gaps in understanding of the business model and opportunities to improve,” she said.

Then in January 2017, Live Oak sponsored a meeting with 11 networks and as many carriers to determine what type of support Live Oak Bank could provide this industry segment.

“The feedback was very clear: some type of forum to represent the specific needs of this growing segment of distribution in the industry was needed,” Strakhov said.

Texas-based TWFG is one organization that was at the early meetings and agrees there is a need for an association.

“The critical issues discussed during our initial meeting of data gathering, technology, carrier relationships and agency perpetuation are areas that all networks wrestle with,” Gordy Bunch, CEO of TWFG, said in a statement announcing the formation. “A group specifically focused on supporting networks can provide significant solutions here.”

Not every agency network is convinced that INA is the right place for them.

“As of yet I do not see the need, at least for ISU,” said T.J. Ryan, III, chief executive of the ISU Group, based in San Francisco, Calif., “We are established and a leader in the space and have few to no barriers to accessing carriers or others,” Ryan said.

ISU Group has 200 agency members in its agency network with $401.5 million in total P/C revenue for 2017, and is ranked the second largest agency partnership in the country, according to Insurance Journal’s 2017 Top 100 Agencies and Top 20 Agency Partnership lists, which ranks networks, aggregators and franchise groups.

Ryan said agency networks have been around since 1978 and “many are mature and thriving” and ISU is a “well established as critical components of the distribution system.”

Bruce Cochrane, president/CEO of Renaissance Alliance based in Wellesley, Mass., number 7 in Insurance Journal’s agency partnership rankings, sees potential value in an alliance of networks but is also uncertain that INA is the right fit for his organization.

“Renaissance Alliance was asked to participate in the formative stages of this alliance,” Cochrane said. “We declined because we don’t believe this is an organization representative of independent agency networks.”

Cochrane agrees there might be a need for networks to come together in an association environment especially as the number of networks increases. But he also believes regional differences and varied operational models among networks make that a challenge.

“Most of these organizations are very locally focused except for maybe half a dozen,” Cochrane said. “The problem is you have such a spectrum of entities and business models among this greater conceptual umbrella of aggregators that makes it very difficult to compare us to them.”

Cochrane said that Renaissance Alliance already participates in an network group for this reason. “We have been part of a small group of seven aggregators from various parts of the country. We have met four or five times (so far) to explore this possibility of being able to work together in some fashion.” The difference, Cochrane says, is that the seven aggregators in this group are more aligned in terms of structure and purpose.

Cochrane also questions INA’s relationship with carriers.

“If you are talking about groups of independent agencies, why do you include the companies in the group – that is counter-intuitive,” he said.

“Not that I want to put a wall between agencies and carriers but going down the line there’s going to be huge disruptions and a lot of it will be at the carrier level,” Cochrane said. “I don’t think it’s appropriate for aggregation entities to get together and form a formal alliance with companies (carriers).”

According to Cochrane, association members should be able to sit down and talk about issues related to carriers. “It doesn’t make for a fruitful dialogue when the big elephant is in the room and you can’t talk about it,” he said.

Drouillard said that INA hasn’t formally decided on what kind of entity would be a member going forward. “As far as potential members, the INA has a broad framework but we are still very open minded; there’s no real specific rule (on who should be a member),” she said.

Jane Koppenheffer, president of the The Insurance Alliance of Central Pennsylvania (ranked 19th by Insurance Journal) sees value in an association for networks.

“I do believe that an alliance group such as this is needed for agency networks and partnerships because of the unique role these organizations play in the insurance industry,” she said. “While there is a great deal of diversity in the structure, ownership, services and size of these networks, we have a number of common objectives, as well.”

Koppenheffer said that “commonality of objectives makes it natural to consider the creation of a group like INA.”

Like Renaissance Alliance, Koppenheffer’s group also has informal relationships with executives of several other agency networks where they meet for lunch or at a carrier meeting to discuss common issues.

The newly formed INA is planning a January 2018 meeting in Tempe, Ariz., to further develop its plans. The meeting is open to owners and senior management of insurance agency networks, insurance carriers, wholesalers and program administrators, and service providers.

Others in Insurance Journal’s 2017 agency partnership rankings include number one, SIAA Inc., and Keystone Insurers Group, SecurRisk, The Iroquois Group and Combined Agents of America.

Topics Carriers Agencies Market