New Insurance Agency Startup Questions

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new2independent
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New Insurance Agency Startup Questions

Post by new2independent »

Good afternoon,

I am a young agent in the process of developing a business plan to start my own insurance industry. It will be based in Boston, MA and I will focus on personal lines insurance and some small BOP's. I currently do not plan on writing life insurance, although I am licensed to do so. I was wondering how to approach carriers for an appointment and also wanted to know if anyone has started a scratch agency? I have about 5 years of insurance experience. I was with Liberty Mutual for 4 years as a leading producer and have one year agency experience. Any help or advice would be greatly appreciated.
d's insurance store
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Re: New Insurance Agency Startup Questions

Post by d's insurance store »

At the risk of sounding rude and abrupt, as stated in a number of postings like yours in the past, there is NO 3 ring binder or 'job in a box' formula for starting an independent insurance agency from scratch. In fact, as time sunsets on what was the retail insurance agency system, it has become exponentialy much harder to start from scratch and have any hope of success or survivorability. Think about it...you're here telling us you have a dream to start from scratch a personal lines and small BOP agency with a total of five years industry experience. The first question you need to ask is 'what are you going to do that is different from what is already being done in your proposed marketing area?', and the second question is 'why should people bust up their current insurance relationships and do business with me?'

My suggestion is that you concentrate on doing your current job at the agency level and observe everything there is to the mechanics of running and sustaining a retail agency. Cozy up to the agency owner or manager and express a willingness to learn about aspects of the agency that are different from your current duties. Keep your eyes and ears open and your mouth shut. Put aside your 'business plan' for the time being and plan on doing your best job on someone else's dime, taking on more responsibility in your career path. Perhaps there might be an ownership opportunity in your current environment.

Given the massive competition in flat markets nationwide for personal lines products and the intervention of the internet as a viable source of insurance products accross all lines, thinking that you can glean a few tidbits of knowledge here on this site on the launching and running of a retail personal lines shop, and then sign a lease, get a couple of appointments, hang a sign and take out a yellow page ad and then succeed is the height of stupidity.

Cool your jets, take your time to learn and stop back in about a year and then pose the question. One year of agency employment combined with 'top producer' in a captive enviornment for four prior years is hardly a strong blueprint for success. Afterall, one could ask, if you were indeed a 'top producer' in the captive system, why did you leave for the independent enviornment?
jtownagent
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Location: New England

Re: New Insurance Agency Startup Questions

Post by jtownagent »

Good for you and good luck. I will not encourage or discourage your decision. People choose to start up new businesses every day. Most fail in the first 5 years, but every business started from day one and an insurance agency has a very low overhead compared to many other businesses. If you work hard and ethically you will suceed. Remember most new business fail from a lack of cash flow, so I hope you have considerable up front cash to get you through your start up time and to sustain a few "difficult months" in a row at some point in the future. Don't FORGET proper licensing and errors and ommission insurance coverage.

I offer you the following suggestions

Contact Progressive for a contract. They will give one to most anyone.

Become a member of the Massachusetts Association of Insurance Agent (MAIA)and GET INVOLVED. This will provide you access to many knowledgeable competitors that you can network with to gain vast sums of knowledge, you may also even a find a mentor. This will also provide you with access to the BIG I Markets, which will immediatley provide you with products and market access (at reduced/shared commission levels).

You may also want to affiliate with a satalite agency Network (MAIA can put you in touch with these as well).

As you succeed and build a large enough book of business, you will then be able to approach and attracted insurance Companies to obtain an appointment.

Finally just like in sales, ASK ASK ASK the markets (companies) you want to affiliate with. If they turn you down, ask what they will need, want, require in the future, to obtain an agency apointment. At least that way you will be able to approach them later on when you think you have met their "agency appointment requirements". So what if you get turned down, initially. Every opportunity is a chance to learn, and perhaps you may get an appointment.

Best wishes.
Last edited by jtownagent on Tue Jan 29, 2013 11:42 am, edited 1 time in total.
tflood
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Re: New Insurance Agency Startup Questions

Post by tflood »

I would go for it!

Look into contacting an SIAA Agency- they have contracts with multiple top tier carriers such as Hartford, Travelers, etc. Build your volume up w/ these carriers and eventually you may be able to contract with them directly. Plus, you get to share in profit sharing with SIAA.
SIAA may be a viable option to get you started. Visit http://www.siaa.net for more info.
Listen to yourself, get an understanding of your unqiue abilities, and build a team to support these abilities. Look for ways to bring unique value to your clients. It's out there....Also read "Good To Great" by Collins.

Always remember, "those that say it can't be done, are usually passed by those doing it"

Good luck!
Rainmaker
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Re: New Insurance Agency Startup Questions

Post by Rainmaker »

I say 'go for it' as well. If you were a top producer at Liberty you have enough horsepower to drive a topline. Operations, and all the back end stuff will work themselves out - trust me.

Although, I see nothing wrong in approaching a few agency owners in your area, sharing your credentials with them, your intentions. You might find some offers forthcoming about joining their firms, perhaps even work out an 'earn-in' or equity arrangement, you may even be their candidate for a succession strategy - I've seen a lot of millionaires created that way.

Follow your heart and don't take 'no' for answer!

Best of luck to you.
David E. Estrada
Founder & Managing Director
Rainmaker Advisory LLC
Portland, Oregon
www.rainmakeradvisory.com
sacman
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Re: New Insurance Agency Startup Questions

Post by sacman »

N2I-

If you visit company websites, most of them have a tab "become an agent".
Reseach companies and determine a few that you would like to get appointed with and see what their requirements are.
It is VERY difficult to just open up your own shop and expect a bunch of quality companies to agree to appoint you.

I spent 17 years with Farmers, pulled the plug a bit over 3 years ago and joined SIAA. It was THE best business decision that I have ever made. They will get you appointed with standard and non-standard markets without production requirements.
You should be able to write about anything that you come across. They have an admission fee, but it is well worth it as long as you are confident that you can make a go of it. I earned more in just bonus money my first year with SIAA then what I was charged to join.
As stated above, expect growing pains and some struggles as you start over. Since your considering 'starting from scratch', I'm sure you already realize that.

The one regret in my career is that I stayed WAY to long with Farmers. I rebuilt my agency in just over two years. Last year was the best year of my career and this year my income is up almost 50% from last year. It CAN be done. You state that you are a young agent. Hopefully you aren't overburdened with financial obligations. You have enough experience to be successful on your own. The actual operational aspect of the agency will be some trial and error, but as long as you don't make massive errors in judgement, you will be able to overcome them. We ALL made mistakes in starting our agencies but as long as you ALWAYS keep the clients best interest first and foremost, you should be able survive and even thrive over time. Success comes from good decisions, good decisions comes from experience, and experience comes from making bad decisions.
Realize that there is a high failure rate in this industry. You've already survived the initial 5 year period that weeds out a strong majority so you obviously have done something right. Keep that same work ethic, don't cut corners and be a trusted advisor to your clients and your chances of success improve dramatically.

I say go for it.
Best of luck
Black Knight
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Re: New Insurance Agency Startup Questions

Post by Black Knight »

I was lurking at this post and appreciate the feedback given, as I am in a similar position (although in FL) and this knowledge will be valuable.
Thanks all.
bchill
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Re: New Insurance Agency Startup Questions

Post by bchill »

Black Knight,

If you are in FL I would look at Great Florida. They are a very successful organization/franchise with good reputation.

Good Luck!!
michael-j
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Re: New Insurance Agency Startup Questions

Post by michael-j »

To paraphrase Dickens, it's the best of times and the worst of times to start your own agency. Commission cuts due to health care reform are going to be a game-changer and you will see many struggling agencies fall by the wayside. Buying leads will become increasingly difficult as many of the traditional marketers lose their clientele and close their doors.
For a few savvy agents however, who invent and play by the new rules, I believe it will be a time of unprecedented opportunity.
Get help, get good at marketing, focus on your clients' needs and you will survive and build a great business.
thebeacon
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Re: New Insurance Agency Startup Questions

Post by thebeacon »

Keep your start up cost down. Start with workspace where you can comfortably make phone calls and create proposals. Get a website then start buying leads slowly and keep adding as long as your taking care of them and keep following up. Get yourself a database software for easy lead tracking like ACT, SalesForce.com, SugarCRM, or then one you can get by is Outlook. Remember to keep the expenses down at the beginning and do not get in to debt. At the beginning use your money for advertising and marketing, that includes lead buying.
AZagent
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Re: New Insurance Agency Startup Questions

Post by AZagent »

With 5 years of experience you can do it, but understand the first year is going to be brutal. You need to have savings or another source of income (spouse, family) to survive the first year. Second year will be tough as well but should be a little better than the first year. By the third year you should have your sea legs to start paying yourself some income. I have seen a good share of agency's start from stratch and do well and I have seen some crash and burns. The agency's that I have seen make it usually (1) have done the research as to marketing niche or something special that they can bring to the table (2) write a killer business plan knowing what the various markets are looking for to get a contract (refer back to #1 about the research). (3) Get involved in the Agents Association and take advantage of what they can offer. (4) as far as the aggregators that were mentioned in the prior postings - some are good - some are maybe not so good - do your research. I hope this will help you some
Rainmaker
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Re: New Insurance Agency Startup Questions

Post by Rainmaker »

We have just launched an "Agency Advocate" Program for a $500.00/mo price point X 12 months = $6,000.

It is essentially a pre-packaged program which includes consulting, resources, templates, procedures, workflows, vendors & PR & Media relations support (press releases, etc) to help insurance professionals launch their own agency. It's kind of like an "Insurance Agency Owner's 101 course" if you will.

Contact us if you would like more details.

Best of luck to you.
David E. Estrada
Founder & Managing Director
Rainmaker Advisory LLC
Portland, Oregon
www.rainmakeradvisory.com
RobLevin
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Re: New Insurance Agency Startup Questions

Post by RobLevin »

Hello All,

Mymarketing company http://www.insurancemarketingpros.com/
focuses on Commercial Lines, P/C, Workers comp, etc.

we set up guranteed meeings with CFOs and Controllers.

We offer exdates data to companies seeking 10 or more meetings

you can see a video here:
http://www.insurancemarketingpros.com/e ... hvideo.htm

I have worked David and Rainmaker -They are professionals and know how to organize and agency for success.
Robert Levin
Sales 2.0 Marketing for Insurance, B2B & Financial Services
516.479.2210 ext 1022
http://www.insurancemarketingpros.com/
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GreenPepper
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Re: New Insurance Agency Startup Questions

Post by GreenPepper »

Has anyone looked into http://www.iaanetwork.com/ ? I am going between them an SIAA. I have met with an SIAA rep and they sound fantastic! From the looks of this other website the buy in costs are lower, the 10% off the top is the same but I think you own your own book sooner. Any feedback from anyone??
TheInsKid
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Joined: Mon Apr 25, 2005 9:01 am

Re: New Insurance Agency Startup Questions

Post by TheInsKid »

Another suggestion would be go to the site of your agency management vendor’s website, all of the major vendors have a listing of what carriers they download with and more importantly what lines of coverages they download. They will also list what carriers and lines of coverages that you will have real time access to, again very important for automation issues going forward. If you do not have a system yet, these are still good places to visit, could give you an idea of what system you may want to purchase. While this is by no means the entire story about purchasing a system this usually is an important part. :P
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