Starting an Independent Agency has never been easier

[AgencyEquity]

According to an article in the Insurance Journal, 4,000 independent insurance agencies were founded in 2008, 2009 and 2010. Most new independent agencies have been started either by individuals who have previously operated a captive agency or by individuals who have been a producer in an independent agency. Starting an agency you can really call your own can provide you with more freedom, more decision-making power, a better income and the peace of mind of knowing that you are in control of your own destiny.

Opening an Independent Agency has never been easier for a number of reasons. First, there are a growing number of cluster groups that are looking to grow their ranks by adding more insurance agencies. Second, the available technology has made it easier for both the insurance agency and the carrier to do business. Third, the cost of running an agency has come down, especially when it comes to technology and the benefits it provides.

There are all kinds of agency networks across the country. Many of these groups refer to themselves as “clusters,” but there are also franchises, alliances, and other types of networks. Regardless of what they call themselves, they are basically master agencies comprised of retail agencies under one master agency code and in many cases allowing for individual agency identity by issuing carrier sub-codes to member agencies. Most of these organizations are open to bringing on new members, although some may be closed and/or restricted to the existing agency members. Many welcome start-up agencies, while others accept only established agencies with a minimum premium volume and have minimum requirements to join. There are agencies that cluster with each other for the benefit of volume production to meet minimums and profit sharing goals. There are also corporate type groups that, in most cases, allow you to operate with your own agency name, but take a percentage of the commissions or charge a monthly fee. These groups exist simply because it’s difficult for a very small agency to get multiple carrier appointments. Most of these groups share a percentage of their profit sharing with their agencies.

The growth in technology available to insurance agencies has skyrocketed during the last five years or so, with technology getting cheaper and cheaper. There are a number of new management system vendors that incorporate social media into their systems and it no longer costs $10,000 or more to get a system for your agency. Systems now start at just over $1,000 per year, perhaps less in some cases. In addition to the management system, there are number of online services specializing in insurance agencies. Many services, such as box.net or docusign.com, provide tools that are very useful to the operation of an agency.

Because of the efficiencies of technology, the cost of running an independent agency has been greatly reduced in recent years. Technology today does not cost as much as it used to, but the reduction in cost doesn’t end there. It no longer takes as many staff members to run an agency, thus saving on payroll-related expenses. Secondly, because of advancements in paperless processes and systems, office space, supply and workspace needs are greatly reduced. For some agencies, it may make sense to go virtual to some degree, perhaps with the assistance of executive suite services.

While going independent is not for all captive agents, those who do want to go independent now have many options. Cluster groups have opened up the doors to allow many new agencies to start up. Technology vendors have stepped up to the plate to bring agencies more affordable technology than ever before. This savings has resulted in lower overhead for all agencies, but has made new options possible for smaller agencies, who must keep their expenses to a minimum.

Will it be easy? Certainly not in the beginning, but if you play your cards right and truly enjoy the insurance business; it can work out very well for you over the long run. In my experience, starting an independent agency after operating a captive agency is easier for a number of reasons. Not only have you already established yourself in the insurance business, but you have product knowledge, your own centers of influence and have gained a great deal of confidence from succeeding the first time around.

[Big Dog]

Perhaps providing a link to this IJ article might give your post some credulity.

[jackwehoca]

Could you please clarify if this was in the print magazine or was an online article.
Either way, date and time would be real helpful for verification.
Thanx

[ForumReader]

Just google it, folks!
http://www.insurancejournal.com/news/na ... 115452.htm

[AgencyEquity]

Just google it, folks!
http://www.insurancejournal.com/news/na ... 115452.htm

Thanks for locating that article, perhaps I should have included this with the origional post. It's great to see people question things, they want truthful information and I certainly don't blame them. That is what makes a forum great as it allow for checks and balances.

[landersinsurance]

I agree with this article. I just started up my own independent agency in September 2010 and I am apart of an agency network that appointed me with all the independent carriers in the area. It is nice going through them because I dont have to worry about meeting a quota with every company.

[jackwehoca]

which agency network did you sign up with?