Independent Start Up

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Msavant00
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Independent Start Up

Post by Msavant00 » Mon Jan 22, 2018 8:16 pm

Hello,

I have been managing a State Farm office in Florida for almost 10 years. I have decided I can no longer manage another book, but rather need to begin building my own. The idea of writing for many carriers is extremely appealing, so I am beginning the process of researching and developing a business plan for an independent agency.

It strikes me that the best option for a new agent without a book is to join a cluster. Having a direct contract with carriers would probably be optimal, however without an existing book and heavy volume requirements, might prove difficult for a new agent. Is this accurate?

Are there any clusters that I should be looking at? What is the best way to vet them? I'm assuming emailing / calling is a good starting point. I value owning my book, and would probably prefer to service my book as well. It seems that is the best way to differentiate myself and my staff. So far, I'm looking at groups like; InsureZone Direct, Pacific Crest, SIAA, SAN Florida. Any input on these groups, or suggestions of other groups to look at.

I'm also curious about the market as a whole. Do you find independent agencies to still be a viable model? How do technologies like Artificial Intelligence and automated motor vehicles impact the space?

Thanks for the input. It is all appreciated.

-Mark

beachagent
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Re: Independent Start Up

Post by beachagent » Tue Jan 23, 2018 11:27 am

To best answer all of your questions you should contact the Independent Insurance Agents of Florida state office and see if they can assist you with direct appointments and they can give you the pulse of the state with regards to becoming an Independent agent. Clusters are great if you don't mind giving up a portion of your commission to be affiliated with them.

d's insurance store
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Re: Independent Start Up

Post by d's insurance store » Tue Jan 23, 2018 11:43 am

It's highly unlikely you're going to be able to launch a scratch agency with direct appointments given zero history in the independent space.

As the prior poster mentioned, making a first contact with an agents association in Florida is a start, but my opinion is that you are fooling yourself that the skillset acquired after a decade of being inside a captive environment is going to be enough to start your own IA.

Unless you wish to spin your wheels, potentially lose a bucket load of money and have your long term career plans derailed, if you're truly serious about this path, you'd be best served by leaving the State Farm safety net and taking a job at an independent agency in a sales capacity to get first hand experience and knowledge about the nuts and bolts of the retail side of the industry.

A nurturing environment like State Farm makes it seem like owning and managing an IA is nothing more than just following a formula and opening a bunch of 3 ring binders. Today's marketplace demands much more of a start up retail agency. Furthermore, you're doing yourself a real disservice by not at least being open to commercial or industry specific insurance marketing, rather than a personal lines/commercial line/life/financial 'jack of all trades' that you now experience with State Farm.

Can it be done? Yes. But probably not with your current, limited, myopic view of agency process and procedure. If you're going to do this correctly, it will require a modicum of personal/career risk and change. You'll have to reach deep within to fully discover if you have what it takes.

mccluney
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Re: Independent Start Up

Post by mccluney » Tue Jan 23, 2018 4:19 pm

Beachagent and d's insurance make valid points. Although I find d's to be a little bit cynical. There should be nothing in your State Farm contract to preclude you from joining the agent's assn. and discussing your career plans and how to best proceed.
Do it!!!

P.S. d's is an experienced independent agent and I do enjoy his posts.

Msavant00
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Re: Independent Start Up

Post by Msavant00 » Tue Jan 23, 2018 6:05 pm

Thanks for the pep talk, lol.

I'm not disillusioned about the risk and difficulty of opening a new business. I expect to work late nights and weekends. I also understand that there are inherent differences between independents and captive(although I haven't opened a 3 ring binder in 20 years lol). I have a college degree and connections with property managers, realtor, and captive agents. I don't expect clients to walk in the door, but I think I can run quotes and win people with my professionalism.

As mentioned I think reaching out to the Florida association of independent agents is a great idea. They have a conference in a few months, but I'm hungry to learn all I can now.

I've started communicating with some of the clusters mentioned before. I'm starting to reach out to marketing reps at some of the insurance carriers as well. That said, I do agree getting contracts with the companies I need may prove very difficult in my position.

One interesting point you brought up was specializing in a certain field. I'd prefer to specialize in p/c (residential and commercial) as that is where I have the most experience. Health insurance could potentially be very profitable as well as long as the aca remains intact. I'm not sure I want to out all my eggs in the commercial/ bsn lines market. I do agree it would be smart to specialize in certain lines (at least to start), i need to get a better understanding of margins; ie: how much premium do I need to break even, which lines provide the best return, what lines are most available and in what region.

Any input on the merit of the various insurance lines is appreciated as I continue to expand my knowledge of the space from 3 ring binder to smart phone.

-Mark

tpearson2040
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Re: Independent Start Up

Post by tpearson2040 » Wed Jan 24, 2018 3:03 pm

Have you considered buying a small independent agency? Find someone who is nearing retirement and make them an offer, asking them to stick around for retention purposes for a year or so. This works well in Virginia.

Msavant00
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Re: Independent Start Up

Post by Msavant00 » Wed Jan 24, 2018 5:55 pm

tpearson2040 wrote:
Wed Jan 24, 2018 3:03 pm
Have you considered buying a small independent agency? Find someone who is nearing retirement and make them an offer, asking them to stick around for retention purposes for a year or so. This works well in Virginia.
This is definitely a consideration. I'm open to any idea that makes fiscal sense as I build my business plan. As D mentioned, i have a lot of learning to do before I write the first policy in my book.

How would one go about buying a book? Is this just a matter of networking or is there an online marketplace to find books for sale?

Furthermore, if I did buy a book, would that enable me to skip joining a cluster or group for contracts? It seems like it would be a step in the right direction, however there are definitely features of being in an alliance of agents that is appealing.

d's insurance store
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Re: Independent Start Up

Post by d's insurance store » Thu Jan 25, 2018 1:45 pm

Msavant00 wrote:
Tue Jan 23, 2018 6:05 pm
I'm not disillusioned about the risk and difficulty of opening a new business. I expect to work late nights and weekends. I also understand that there are inherent differences between independents and captive(although I haven't opened a 3 ring binder in 20 years lol). I have a college degree and connections with property managers, realtor, and captive agents. I don't expect clients to walk in the door, but I think I can run quotes and win people with my professionalism.

As mentioned I think reaching out to the Florida association of independent agents is a great idea. They have a conference in a few months, but I'm hungry to learn all I can now.
You're not answering the key question for someone who wishes to replicate a State Farm environment without the pressure for life/financial sales in the personal lines space...'Why do business with me?'

The current personal lines marketplace is already saturated with vendors, direct and agency, captive and independent. Each one screams 'Great Rates!, Exemplary service! Safe! Strong! Secure!'

In this day and age, you don't win many quotes by x-dating and a display of professionalism. In spite of all of our wishes to be judged on our superior skill sets, it's rates that win the quotes. I can count on two hands the numbers of people who've chosen to do business with me in the past five years who've said 'Gee, you're such a great agent, I'd do business with you without knowing the rate.' More typical is phone chatting or a personal visit to pick my brain for recommendations and then walking that either back to the incumbent for tweaking or taking my advice and shopping it for lower rates.

Florida may be different, but here in California, realtors, property managers and title company people who used to be a valid source of referrals have pretty much dried up for easy, valid leads. Sure, I'll get the realtor referral when someone buys a hard to insure property, but if my agency writes it, we've just become positioned as the 'accommodation agency', doing the one off crap, while the lucrative 'easy' coverage remains with GEICO, Progressive, USAA because the rate is lower.

Truly, a scratch agency can start and grow, but your initial reliance on the tried and true 'I'm a professional with great service attributes' will, again my cynical opinion, not be enough to keep the lights on after your initial savings run out.

My endorsed suggestion for a narrow, niche focus gives you credentials for expertise in a limited arena, the ability to really zero in on web search activity (have you searched for results for Florida cheap auto insurance rates?) and insulates you from the positioning of being 'Fred, the hometown insurance agent who sponsors the little league team'.

Msavant00
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Re: Independent Start Up

Post by Msavant00 » Thu Jan 25, 2018 6:02 pm

Hey D,

I'm not really looking to replicate a State Farm agency. In fact, that's one of the reasons I'm going independent. I'm tired of losing clients by the handful to other carriers with lower prices. I'm tired of working crap internet leads for a <5% close ratio.

State Farm and Allstate have really tightened up their underwriting in Florida. I would estimate close to 50% of the people I quote are ineligible. I don't think it's unreasonable to leverage my current relationships and foster better relationships with captive offices. Honestly, it's embarrassing when you tell someone they're ineligible, so having a local agent that can help seems like a reasonable niche. I'll be honest, you may know a lot about independents, but I don't think you understand the captive agent space in South Florida very well.

That said, I think you've brought up some good points, but I would very much appreciate some clarity. You seem to think it is paramount that I focus on a niche market. Do you mean a specific type of business line? My area of expertise is in P&C. home, auto, umbrella, antique auto, liability, rental property, HOA and COA. The agents I've been speaking with seem to think it is doable and getting contracts with vendors like Travelers and Progressive is doable. I'm just not sure why you feel independent rates aren't competitive?

I'm also curious how others are generating leads? Social networking, in office networking, google add search, asking for referals, seem like what's working with some of the agents ive been speaking to. Buying leads sounds pretty poor as far as quality goes. Any other ideas? Heck, I'd even take some business cards and walk around the mall to meet potential clients!

EDIT: I feel like this thread might be getting derailed a bit. Right now, I'm trying to garner a better understanding of the best ways to obtain contracts with vendors. Groups, Clusters, Alliances, Franchises. they all seem very similar, how do I best distinguish which option is best? Are there any particular teams of agents that seem great?

beachagent
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Re: Independent Start Up

Post by beachagent » Fri Jan 26, 2018 12:04 pm

I have been approached by a company called Coastal Business Intermediaries about selling my book of business. You might try giving them a call about books for sell in your area. Ask for Pat at 321-255-1309.

mccluney
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Re: Independent Start Up

Post by mccluney » Fri Jan 26, 2018 3:28 pm

Well, as a "scratch independent agency" if you buy a book of business, there is no guarantee that the existing insurance companies will appoint you as an agent. Just be careful and make sure you have a place for the book of business you purchase.

Msavant00
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Re: Independent Start Up

Post by Msavant00 » Fri Feb 02, 2018 10:48 am

Thanks for all the responses! I've been speaking to a lot of people and doing a lot of research ad I build my model. I need input on a few items.

Firstly, autonomous cars are a major concern of mine. I don't want to build a book, only to have it be worthless as manufacturers provide their own coverage. As an agent, do you feel it is possible to build a book of business on personal home insurance alone? Would it make sense to start a book on home / auto, but shift focus of your business over time?

As we see more autonomous vehicles on the road over the next 20 years, the auto insurance pie is going to shrink. Do you think insurance carriers will still have difficult volume requirements even though their is much less opportunity? As an established agent with a large book of auto, do the volume requirements start to subside?

As a startup, how many direct appointments make sense? Of I have 10 auto carriers, it may be impossible to meet the volume. Is it better to start with just 3-4?

Thanks for input!

beachagent
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Re: Independent Start Up

Post by beachagent » Fri Feb 02, 2018 12:03 pm

There will always be new things that disrupt any model you establish, i.e., Lemonade Insurance. If you worry and over analyze every possible factor that will cause you to loose business, you will never enter into this industry. Do not take on too many appointments. You will find you will only place business with the most competitive carriers. Get an appointment with 1 or 2 non standard carriers for auto and 2-3 standard and you should be good to go. Find a commercial product you understand and can sell to add to your P&C portfolio don't settle for just personal lines. Homeowners should not be your only line because what would you do if your carriers decide they no longer want the exposure where you write business, i.e., the coast and hurricanes, CA and wildfires, Nebraska and tornados, TX and hail - carriers leave when they have too much exposure and can't get rate hikes to justify staying in the market.

willkastroll
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Re: Independent Start Up

Post by willkastroll » Fri Feb 09, 2018 1:11 pm

Its not as hard as you make it out. Buying a small agency is the way to go. Contact Agency Brokerage Consultants as they are a leader in the industry. Banks are lending. Do your due diligence and good luck.
Will Kastroll
Harbour Insurance
http://harbourinsuranceagency.com/

FreeAgent
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Re: Independent Start Up

Post by FreeAgent » Mon Feb 26, 2018 8:39 pm

beachagent wrote:
Fri Feb 02, 2018 12:03 pm
There will always be new things that disrupt any model you establish, i.e., Lemonade Insurance. If you worry and over analyze every possible factor that will cause you to loose business, you will never enter into this industry. Do not take on too many appointments. You will find you will only place business with the most competitive carriers. Get an appointment with 1 or 2 non standard carriers for auto and 2-3 standard and you should be good to go. Find a commercial product you understand and can sell to add to your P&C portfolio don't settle for just personal lines. Homeowners should not be your only line because what would you do if your carriers decide they no longer want the exposure where you write business, i.e., the coast and hurricanes, CA and wildfires, Nebraska and tornados, TX and hail - carriers leave when they have too much exposure and can't get rate hikes to justify staying in the market.
I am studying the same idea here in the State of Texas. .
And i greatly appreciate you input.
My Question is, how do you get Appointed with carriers ?
What is the step / steps and or procedures ?

Kindly please elaborate

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