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 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 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,” Drouillard 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.

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.”

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.

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.

“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,” he said.

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.

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).”

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

The newly formed INA is planning a January 2018 meeting in Tempe, Ariz., to further develop its plans.