Starting an independent insurance agency
Starting an independent insurance agency can be confusing due to the amount of steps needed to get started. While there are multiple steps, none of them are very complicated or difficult. This blog will focus on the steps needed to get started. It will also provide some of the more common mistakes agents make when starting an agency. Call our office or send us an email if you are looking for more detailed information
Starting an independent insurance agency – speaking from experience
Crowe and Associates was started from scratch in 2008 with little support or guidance. As a result, I made about every mistake possible while building the agency. This blog will outline a number of the mistakes we made along the way so you can avoid them. We will also lay out the basic blue print you need to get your agency off the ground.
Starting an independent insurance agency – Determine product offerings
The first step is to determine the type of products your agency will offer. There is not really a right answer here or best way to go but it is important to figure out what you want to offer before getting started. Maybe you want to focus on Medicare (we focus on Medicare) or perhaps you want to focus on life insurance or property and casualty products. The main idea would be to find a base type of insurance you plan to offer as you main focus and then fill in all the other product lines you want to offer if you want to offer other products at all. There are numerous agencies that use both strategies. The one you use just depends on your preference.
To give you a real life example, our agency does the follow: We offer Medicare Advantage, Supplements and Part D stand alone drug plans as our main focus. Most of our marketing and recruiting efforts revolve around Medicare. We recruit our agents for Medicare. Our value add programs such as our free lead program is a Medicare based lead program. We then added other lines of business such as life insurance, health insurance, vision, dental, DI, LTC and indemnity based products.
Starting an independent insurance agency – What type of agency will it be?
Do you plan on being the producing agent of your agency or are you going to recruit agents to sell under it? There are a number of different agency set ups that you can consider:
- Agency with the owner as the producer
- Agency with the owner as a producer and other producers selling
- Recruiting agency with producers
- Recruiting agency only with no producers
The easiest way to become profitable is for the owner to also sell. Selling product is the quickest way to generate a profit. If your agency is only going to work off of overrides from other agents selling, it is going to take much longer to become profitable. Ideally you would want to both sell and recruit other agents to sell and collect overrides. Doing both will provide immediate income and will also provide income when the agents you recruit start to sell. While this strategy is the best it can also seem overwhelming to get started. Most people start off doing one or the other.
Starting an independent insurance agency – Licensing
An insurance license is needed in each state you plan to write business in. Keep in mind, if you create an agency and want the commissions to pay to that agency (instead of paying to you personally) the agency will need to be licensed. Most states require you have an individual license in that state and then you can get a license for your agency. The easiest way to obtain a license for your agency or any non residents licenses is through NIPR. Additional testing is not needed when adding non resident state licenses. Simply apply on NIPR and pay the applicable state licensing fee.
Starting an independent insurance agency – Contracting
Once active insurance licenses are in place, contracting can start. Most companies still use paper and electronic contracting. Make sure to look at the type of contract you sign. The best contract would be one at a street commission level with comp being paid directly to you or the agency from the insurance carrier. I strongly recommend you only sign a contract that allows you to own your own book of business. Be cautious of any LOA contracts that have another agency paying you new and renewal commissions. Most carriers now require Errors and Omissions insurance. E and O can be purchased from a number of companies such as NAPA and CalSurance. We offer E and O for $300 a year as an agency. If you want to be a General Agent click here to learn more. CLICK TO LEARN MORE ABOUT GENERAL AGENCY CONTRACTING AND REQUIREMENTS
Click for contracting and certification recorded webinar
Starting an independent insurance agency – Sales and Marketing
The hardest part of starting a sales agency of any type is getting enough sales opportunities. Too many people make the mistake of assuming if they start an insurance agency, they will just magically start getting business. In my opinion, this is the single biggest reason such a high percentage of insurance sales people and agencies fail. They dont have a good marketing and/or recruiting strategy. You will need to have something that stands out from all the other insurance agencies out there. As an example, Crowe and Associates offers a free Medicare lead program as a way to recruit new agents. The program helps us stand out from the crowd. If sales to consumers is the goal, come up with some unique product offerings or marketing ideas to help get in front of qualified prospects. The recorded webinars below lay out various strategies for marketing Medicare plans.
Medicare Lead Strategies Webinar Recording
Free Medicare Lead Program Webinar Recording
Starting an independent insurance agency – Final thoughts
Starting in the insurance field is very difficult but not impossible. Most people fail due to lack of proper planning, poor organization and below par work habits. Come up with a game plan, get organized and then implement that plan and stick to it. It will take time to start generating revenue. I would not suggest starting an insurance agency if you are living month to month from an income standpoint. If cash flow is tight, you will want to look into a loan in the early stages as it is very difficult to start generating revenue immediately when starting a new sales agency.
Crowe and associates works with numerous general agencies to provide them with a number of services such as Free medicare leads, online quote engine at no cost, contract processing, help recruiting agents, application processing, online enrollment and a number of other value added services at no cost. Links to more information on our programs are provided below.
Is there a monthly fee oR production requirement to contract with your company?
Hi Elizabeth. No fee or requirements of any type