I.A. start up- cluster, alliance (siaa type) or go it alone?

[SadCaptive]

Captive agent here with about 2.5 mil in dwp. Sick & tired of being a captive. Suggestions on starting a new I.A.?

[Big Dog]

Hook up with a reputable independent agency rather than starting your own. Look for a mid-sized regional agency that has a good selection of markets and is looking to grow by adding competent producers.

[sacman]

SadCaptive-

I joined SIAA three years ago, and it was the best career decision I ever made.
I tried to get appointments directly, but could only get a handful of non-standards. The standard companies either wanted an existing book and/or minimum GWP guarantee. With SIAA I got Travelers, Hartford, AAA, MetLife, Hanover, Safeco among others from day one, with no minimum requirements. Yes, SIAA has a joining fee, but I made more in first year bonus' then what that fee was. I pay them a small monthly fee over a "frozen amount" of commission. Minimum monthly fee is $300. However, because of their size they are able to negotiate higher commissions than if you went on your own.Currently the smallest commission on preferred auto business I earn is 15%, new and renewal, and the highest is 24%. So even after paying their monthly fee, I'm confident that I earn more than if I had gone on my own. If you join on as AP for an existing agency, your going to have to give up a split to them as well. The other benefit of SIAA is that the business is yours. The facesheets are in your agency name, and if you decide to leave, the book of business is yours to take with you.
Don't let the joining fee of SIAA scare you. It's a great concept and makes leaving the captive side as easy as possible.

[SadCaptive]

Sacman,
What about the 10 / 15 yr commitment to SIAA? Also, how is SIAA better than smart choice? Just curious, what are the Hanover & Travelers home / auto commissions? Are there regional carrier in siaa like Donegal?
Thanks,
SadCaptive

[sacman]

sadcaptive -

I'm going to sound like a SIAA recruiter, but I am not.

It's been a few years since I investigated Smart Choice but here is what I remember.
You pay 30% of the first $50k of commission, then you keep 100% afterwards. So if you make over $50k per year you will owe them $15,000 each and every year. Also, they had a two year non-compete from the companies that they represent. So if you leave, you can take the customers with you, but you have to forfeit all of your appointments for two years. Ouch.
I don't have an personal experience good or bad about S/C, I just felt like SIAA was better suited for me.

SIAA does have a time committment. However, you can buy out of it at any time. Granted there is a fee, but you can walk away any time, keep your appointments and keep your book of business. Your monthly fee is calculated using a frozen amount. Which means that say currently you make $240,000/year. Your frozen amount would then be $20,000 per month. Your fee is 10% of your earnings over $20,000 with a minimum of $300. You make $15,000 you pay $300. Make $20,000 - you pay $300. Make $24,000 - you pay $400. Even if you make $25,000 every month, then you would pay $500 per month or $6000 per year. A hell of a lot less than the $15,000 you would have paid with S/C.

Currently with Hanover I make 17% new business auto and 20% new business home. Renewal commission is 15% for both.
Travelers is 15% new and renewal auto, 20% new and renewal for home.

There are SIAA national contracts and then the local Master Agent can negotiate contracts for regional carriers. You also have the option to get contracts outside of SIAA, however commissions earned from them have to be included in earnings for you monthly fee calculations. Also, the fee is only calculated on personal P&C and commercial. Life and health commissions do not need to be included.

Hope some of this helps.

[NorCal Insurance]

As you start exploring the I.A. you will enccounter a few delays in the transition, plus you need to be careful about your exsting book.

No matter who you partner up with as an I.A., Superior Access, Smart Choice, NIA, etcc. you will have to pay some kind of fee. it a balancing act between service, writting capabilites & owwnership of your book.
I have worked with many agencies in the transition from captured to I.A.

I can provide some guidance and assistance with this transition, if you are interested. Feel free to contact me at: Brian@SoftechInternational.com.

[tjryan]

Little reason to go it alone as a start up...you get a lot of value from being associated with a qualified network like ISU.

[SoCalins]

Sacman,

How would they figure your current earnings if your entering into a contract? It seems odd, what would they do for year one? And the 300 dollar minimum does that cover your rater,

What is a range for initial buy in also?

I've been a producer for a farmers agency for a couple years and then went out on my own with Superior Access. The lack of binding authority makes it next to impossible to write any consistant business, in addition I've had problems where clients buy cars on weekends and I have to tell them I can't do anything till Monday. I worked for a while with another agency just to get some binding authority but in the end that wasn't a good fix either. I've got a new marketing partner who has a large book of mortgage clients that we're going to go after for homeowners insurance and package the autos, I'll need quick binding, good contracts and the ability to write business in multiple states (a lot of his clients have homes in California, Texas and Florida). Any knowledge of these options would be great so I can start setting meetings to see if SIAA or TWFG might be good fits. TWFG has a buy in as well and takes 20% off the top (10% more than SIAA). But contracts are extremely different.

Thanks,
SoCalins

[dirtmen]

You might want to look into FMJ Agency Alliance. They have helped many former captive agents get started on the independent side of the business. fmjagency.com I was fortunate enough to find an independent book of business to purchase, when I left Allstate. However, if I had to start from scratch, I would go with them. Good guys.

[jwns2864]

Whenever you go into an arrangement make sure you understand the exit from the arrangement. The value of you agency is determine on your book of business. If the agency contracts are not in your name you are an agency with no companies and worthless. Does the exit plan discuss profitsharing, company appointments, ownership of client info, noncompete, etc. Remember the other agents will have company loss runs and expiration dates with you client info. Read the cluster/alliance agreement very carefully. These arrangement are like getting married...divorce will be costly.

[manny79]

Hi,

This is my first time posting on the forum. I have been a captive agent representative for the last 7 years. I do not own any book of business as I was only an employe but I am getting ready to go by myself. My question are:
What will be the best way to go cluster or alliance?
If any, what options do I have in Florida for it and the fees seen that i will just start from scratch.

Thanks

[d's insurance store]

This is my first time posting on the forum. I have been a captive agent representative for the last 7 years. I do not own any book of business as I was only an employe but I am getting ready to go by myself. My question are:
What will be the best way to go cluster or alliance?
If any, what options do I have in Florida for it and the fees seen that i will just start from scratch.

Thanks

You need to start with a solid business plan with a strong direction of what and how you want to pursue the market. Personal Lines? Commercial? Life + Health?

While you're doing that, you need to either contact the IA group in your state and/or start subscribing to the trade magazines to get a feel for what you can do in the way of direct appointments or affiliations with GA's or groups or clusters.

Unless you've done your homework and planning in this market, you're likely to fail. The days of finding an office, hanging out a sign, getting a Yellow Page ad and joining some community civic organizations and waiting for the phone to ring and the door to swing are long gone. Have a strong idea of what your agency identity will be and then research that market to make sure you're convinced there's enough there to make a living and thrive.

Good luck.

[kylemead]

Sadcaptive,
I may be able to help you out if you are located in Texas. I am with IMSG, imsgtx.com. We are an aggregator that offers direct access to both national and regional carriers. Our primary focus is on being a personal lines solution for captives going independent in addition to filling gaps for existing agents. There are no fees, no start up costs, and you own the business 100%. There is no exclusivity to doing business with us. Meaning anything you do with us does not affect any of your current contracts and you can get directs by yourself if you want.
I agree with Sacman that SIAA is a strong option for a captive going independent especially for an agent whose focus is on commercial lines but if you are primarily personal lines we may be a better solution for you.
I am happy to visit with you anytime to explore the possibility of building a long-term mutually beneficial relationship. 214-683-6567.
Good Luck,
Kyle Mead

[manny79]

Thank you guys, as I mentioned before this are my baby steps. I am still working on my Business Plan thats the reason why i need help identifying were to go cluster, alliance or alone. My goal for the first 2-3 years is to work mainly auto,fire and life. I have sold this products successfully for the last 6 years working with Allstate & State Farm and i feel really comfortable in that area. Based on the research on progress I will determine where to start on my Business Plan as each option has its particular expenses. Any idea on it for Florida, we have our unique insurance limitations here and I will like to find a great alliance or cluster to guide me the first 5-10 years.
I had realized that those products are actually what could help me move forward on my carrier and I am bilingual which is a plus in the area. I am looking for a minimum start up investment.

Thanks for yur help again guys I really appreciated.

[sacman]

Manny,

Its been 3 years since I last posted on this thread and I'm still as pleased with SIAA as I was then.
My agency continues to grow, my income is increasing and even though the markets have tightened I still
have all of my appointments.

My agency is 95% personal lines. In todays market getting, and keeping, preferred appointments is critical to
your success. There are many other cluster/networks out there. Start investigating and meeting with them to see which
one best suits your needs. I'm not aware of which ones are available in FL. Check out this web site. I may help in your research.
http://www.agencyequity.com/