How to Start a New Independent Insurance Agency

June 5, 2019

Whether you’re brand new to the industry or you’ve been in it a few years, starting your own agency can be both exciting and challenging. In our latest episode of Operation Agency Success, ITC CEO Laird Rixford outlines the steps you’ll need to take to start your independent insurance agency.
 

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Video Transcript

Congratulations on deciding to start your own independent insurance agency. You’re in good company. Whether you’re brand new to the industry or you’ve been in it a few years, starting your own agency can be both exciting and challenging.

Here’s an overview of the steps you’ll need to take to start your independent insurance agency. 

First, Get your license. 

The license you’ll need to obtain depends on your state and the lines of business you plan to sell.

Contact your local association chapter. Two of the biggest associations are Professional Insurance Agents, known as PIA, or Independent Insurance Agents and Brokers of America, known as the Big I. They are a great resource for what type of license you need and how to get it. 

Next, talk to your lawyer. 

If you have a non-compete or other contractual issues, a lawyer can help you navigate that. They can also give you advice on the business type that is right for you.

For example, an LLC or S-Corp. Different business types have different tax and liability implications. You definitely want to talk to a lawyer on this one.

Then, you’ll need to raise capital. 

Will you start your agency from scratch? Or, are you going to buy a book of business? Either way, you will need capital to get started.

Capital is also necessary to pay for office space, furniture, hardware, insurance agency software, E&O insurance, etcetera.

After that you’ll want to create your business plan. 

Whether you are trying to get a carrier appointment or apply for a business loan, people are going to ask to see your business plan. Use the link below to learn how to create a business plan.

Next, get E&O insurance and meet your state legal criteria. 

You may need errors and omissions coverage before getting your entity license. Most carriers will require you to have E&O insurance.

Check with your local association. They may offer E&O insurance or can help you find it. Also, register your business with the state. Get your taxpayer identification number from the IRS.

Before you can start selling, you need access to insurance markets.

You can try to get direct appointments, though this can be difficult for a startup agency. You can also go indirect through an MGA, wholesaler or market aggregators.

Then, you need to find the right technology. 

If you have more than a handful of carrier appointments, a comparative rater is worth the investment. It will save you time when quoting a policy. If you only have a few appointments, start with an agency management system.

Don’t make the mistake of not starting with any systems. Once you go down that path, it can be a hard habit to break and a tough transition to work through.

When you’re starting out, digital marketing may not be at the top of your priority list. One thing is a must: Your insurance agency website.

I recommend you secure your web domain and build a website when you’re starting out instead of waiting. A great website doesn’t have to cost a lot. Find a website provider that can scale with you as you grow and your needs change. 

Finally, as a new insurance agent, it is in your best interest to stay on top of trends.

Read trade publications, forums, and blogs for information, news, and tips. Join your local association for networking and education opportunities. Attend events like conferences or webinars where you can learn. Listen to podcasts. Watch videos. We’ve got a lot in this channel you may find useful. Don’t stop learning!

By following these steps, you’ll be well on your way to owning a flourishing insurance agency. 
 

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