Key Cluster Considerations

March 21, 2005

What will be the cluster structure? Will it be very loose and flexible or a much more formal arrangement with many shared services and expenses?

  • Who will hold company contracts?
  • Who will be responsible for the premium collection and trust account–the cluster or each member?
  • What is the limit of the cluster’s management control?
  • What will be the binding authority for each member?
  • How will the admission of new members be handled? Will they be treated the same as the founding members?
  • How will the withdrawal from the cluster be handled? Will this impact the umbrella organization? How will markets be affected?
  • Should each member sign a non-compete agreement?
  • What will be the expense to run the cluster? How will the members be charged to be a part of it?
  • Who do the producers represent, the cluster member or the cluster itself?
  • Does each agency have its own E&O coverage or does the cluster have one policy? If there are individual policies are there additional exposure issues?
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