IA start up with a twist

[JevonCC]

The "how to start an IA" or "IA vs Captive" discussion is all over the forums and websites. Frankly it's the same stuff over and over again and I can't find exactly what I'm looking for. So maybe somebody here can either answer my questions or point me in the right direction.

I am a producer for one of the large Captives. I am located in PA and sell 90% PL. A close friend of mine, mentor, and a former producer at the same company and agency I work at, now owns an IA. We have discussed a lot over the last few weeks and are getting close to putting in place the ideas we have thrown around. That is, allowing me to sell for his IA, with a diminishing split, up to a certain dollar amount premium written and/or a time frame. When that time comes, we will have a buy out clause established that I could take my book with me into my own IA. While I'm writing through him I would be pursuing appointments in order more easily transition out.

Before I ask any of my questions, is there anybody out there who has been either the agency owner or producer in a similar scenario?

[rodgwag]

What twist? Nothing special or new here.

[JevonCC]

Thanks for the reply. Does this mean that this is how you started? Nothing new? Can you link me to a thread or article posted by someone or a group of people in a similar scenario in Penn? Thanks.

[d's insurance store]

My suggestion is to lay out all of your expectations and goals and severence process in iron clad writing at the very beginning and work with a contract attorney.

It's one thing to discuss this kind of issue over coffee when there are not intertwining finances and quite another when you want to disengage and that means real money issues for your sponsoring agency. Have you also discussed what the ramifications are if your business affects the other agent's loss ratios and contingencies?

This is going to be almost like a marriage, but without the sex. Discuss, discuss and then have another discussion. Put all of the potential issues in writing with solutions. Good luck.

[LadyBroker]

I think what he meant is that most IA"s start out the same way you are proposing....there is nothing particularly new about 2 guys sharing an office and selling insurance together. My bigger concern for you is that you are 90% PL, and by that I assume you mean Personal Lines. If you want to be a serious Independent Agency, you have to be more in the commercial arena. If your proposed partner is more heavily commercial, it could be a good marriage of convenience. But for you, long term, get your hands dirty in the Commercial side of the world.
Good luck.

[JevonCC]

Haven't been on here in awhile. Thanks for the constructive replies from D's and Lady. I was hoping to drum up this kind of response so that I could go into more specifics. I'm def going to be all PL until I get established and then the hope would be to segway that into diversifying my book. Specifically though, let's just say we make it a three year process with a buyout at that mark. Would a 70-30 first year split and then a 80-20 second year and 90-10 third year with a 2x buyout sound reasonable? Also, I would be servicing all the clients I bring in, using my own home office, supplying my own supplies, etc. So basically he would be making money off of me without having to do anything. All I need is the carrier access from him. If my losses become a little to intense, he knows that they will fall off his book after I leave anyway. We have discussed, discussed some more, and are still discussing and will continue to do that. This is a 4 month from now kind of plan.

[AgencyEquity]

There have been all kinds of arrangements out there, the only think I would recommend is that if the agency is in a cluster group, that you plan on joining that same cluster group once you do break off and start your own IA, the reason for this is that you will use those same markets and you will need appointments with those markets. I wrote a Guide to Starting an Independent Insurance Agency, this touches up on some of the issues you need to address, you can view this guide at...
http://www.agencyequity.com/component/c ... nce-agency