Start up cost for a new agent

[manny79]

Hi,

I have been thinking about this for a long time already. I am currently a captive agent and will like to go independent but I am having a difficult time even to start the research. I dont know where to start, or how much money will I need. I am on FLORIDA region and will like to start close by, meaning on miami dade/broward/palm beach areas. I have a few questions that will help me to do my appropiate research:

1- Should I chosse a cluster, alliance or by my self to begin with?I have experience but not book of bussines so I may need their help to get appointments with the major companies.I have reviewed SAN OF FLORIDA & SMART CHOICE, but I havent been lucky enought to speak with them yet.--------WHAT IS THE COST?

From there I will have to see if I have to purchase an Agency Management software or no (I dont know is the Cluster r alliances include it). This bring my 2 question
2- What will you guys recomend as Agency Managment Software on this area to begin with-------WHAT IS THE COST?

3- I have never work independent before only ALLSTATE & STATE FARM now in my current office we run THE quote and after it the MVR and the agent pays for it but it is integrated on the ABS software that we use on State Farm. What will be the process independent?Do I have to go to a separate place for the MVR-------WHAT IS THE COST?

I have P&C and life/health licenses so my target market will be personal lines for now. I am planning to start by myself in a small office and after it probably hire a customer service rep to help me with the service.

Thanks for your advice in advance I really appreciate it

[d's insurance store]

Manny, you've been here before, and I offered up some advice in an earlier question posting from you. Now, I'm going to sound cruel and rude here, but what you're asking for now is the basis for an 'office in a box', and if you're sincere about pursuing an agency on your own, you're going to have to put a lot more effort into this than just posting 'how much' questions here or anywhere else.

You're also going to have to realize that there's a dramatic difference between the world of a captive, in your case Allstate and/or State Farm and the independent agency system. Both of those environments offer up propriatary systems and processes and are supportive in the writing and servicing of policies in their worlds. Being independent means a lot more freedom and the potential for greater income, but it comes with a big price of mastering a number of different company cultures, underwriting standards and technological platforms.

Any 'just add water' advice that anyone would offer up here isn't going to do anything more than barely scratch a surface of what's involved in setting up and running even a one person shop in the current market. I think your first and most important question to answer, especially if you're thinking in terms of a retail personal lines shop, is to figure out what you're going to do differently for your potential market. There's no shortage of places where the population in any state can obtain the basics of auto and property insurance. You're going to have to do a lot more than just scream 'great rates, great service' to convince propsects to move their existing coverage. And besides, where are you going to scream those words anyway? Direct mail? Newspaper? The internet?

Then my second piece of advice is for you to take the initiative and see if there's an independent agency outside of your potential marketing area...say 50 miles or so away that would be willing to hire and mentor you at the very least on a Saturday. Maybe offer to work as an intern keeping an otherwise closed office open on Saturday. That will expose you to the world of independent agency and will allow you to get some real world experience in what's involved in opening and running an office.

And finally, I already suggested reaching out to an agent's association in your home state. Find that association, ask them if they have programs and materials supporting a new agency, pay the dues and start learning.

Manny, if you launch now or anytime soon with the very limited knowledge you have, you'll be back at a captive office answering phones inside of a year with a massive hit to your bank account, licking your wounds.

[manny79]

d's insurance store ,

I really appreciate your notes. Rather than rude and cruel it sound honest and sincere. Exactly what I was looking for. You just mentioned the two bigest problems that I know that I will have to face. The technology and the difference and price ofthe freedom, about underwriting I have no problems with that actually. Not because I know all ,just because I had received so many hits in the past that I have learn from A-Z how the produtcs I work with. Guidelines will be follow and it will not be an issue actually. But yes I will be running into a totally new word from getting all the softwares to findig out what software to use and pay for it, MVR etc...yes it is definitly a challenge, a challenge that many people have taken and succeed,others had fail so...Thats the reasson why I had come here to look for some answers. You mentioned one great solution and I do appreciate that, goind on saturdays to a independent agent will give me a better prespective of that new world for me. I did a Marketing study already so I have that part covered. Thanks again for your honesty and I hope to hear from you again.

[sacman]

Manny,

we're crossing threads here a little bit but, in comparing long term cost it is my honest opinion that SIAA will be far cheaper in the long run than Smart Choice. You will have to get the specific details on each program and make a detailed analysis.
What may be the cheapest option to get started may not be the cheapest long term choice.

SIAA has discounted pricing on many raters and mgt systems.
I currently use EZLynx for my rater.
After months of shopping and comparing I have chosen QQ Solutions for my Mgt System.
It offers everything that I'm looking for and they have a very good deal for SIAA agents.

Most companies have a closing ratio for MVR charges, close say 70% of quotes where MVR's are run and no charge.
Go below the closing ratio and they will charge.

The hardest part in making the switch from captive to IA is learning all the company differences. From uw guidelines, market appetite and computer programs. That is your learning curve. Your agency will basically run the same except you'll be quote 8-10 companies instead of one and will more than likely have an competitive product to present.

[manny79]

Thanks sacman,

I finally got in contact with SIAA and (as you said)I will be better of with them in the long run. They do have discounts on different softwares so thats great. I have a little concern, I contacted the Smart Choice yesterday and they offer the Ezlink Rater to their members but still they recomended me me to take the QQsolutions Rater as it is a more efficient one. So based on that will be a hard call to make specially if I have the Agency Managment with them. I figure it will also be a lot less expensive to pay for one package to the same company but as you metioned I have to see. Sometimes saving is not the way to go I want to be sure that it is in fact best option before signing anything.
About the MVR I appreciate your input ,that makes sence now.

Thanks again for your help and lets keep in contact. I am facing a little problem now as I am located on Broward the SIAA agent told me that it will be hard to get any contracts so.....lets see how and when I can start rolling

[Rainmaker]

It's obvious you are getting very good comments and recommendations on this string. And it appears you are on your way to forming up your new agency. However I would like to suggest an alternative should you find the costs prohibitive or find yourself constrained in market access. It would appear you wish to focus on personal lines and have the ability to write individual life, DI, LTC etc as well. You may wish to consider approaching brokerages in your area that have EBEN and P/C practice groups established, who are primarily engaged in B2B transactions yet do not have a personal lines department and would like to cross sell business owners with personal lines. In this scenario, you have the ability to leverage existing contracts and resources, steady deal flow from established practice groups, and a degree of autonomy that, while not commensurate with owning your own agency, is still a notch or two above your previous situation. You will not have to contend with deploying your own capital and putting it at risk, and, there may be an equity play for you running a PL practice group for a brokerage.

Food for thought.

[manny79]

Thanks Rainmaker,

I appreciate your post. That could definately be an option to consider

[AgencyEquity]

My website has a number of resources to help those looking to Start an Insurance Agency including my Guide to Starting an Independent Insurance Agency, you may view this at:
http://www.agencyequity.com/guide-to-st ... nce-agency

There is a section on start-up costs as well.

[manny79]

Still really confused , I dont want to make a desicion that can change my life forever without double checking 20 times. I have contated Smart Choice and SAN of Florida. They both are great options from my point of view it all comes down to carriers and affordavility. But now it had come to me aomeone with " Great Florida Insurance " a franchise. Any advice about this? Thanks

[bchill]

I used to call on several Great Florida Agents. It has been three years since I have talked to any of them but the agents rarely had anything to say other than positive comments about the relationship. Based on that I would definitely look into them.

[jackwehoca]

Does anyone have any suggestions for starting a new agency or to affiliate with an agency that also has ability to offer financial planning in California? Have my 7/63/65 licenses as well as my P&C, L&H, and Variable Annuity; have to make a decision soon, since the two year window to re-activate my Series 7 with NASD/FINRA expires 8/1/2013? Located in the greater Los Angeles area.

[manny79]

I used to call on several Great Florida Agents. It has been three years since I have talked to any of them but the agents rarely had anything to say other than positive comments about the relationship. Based on that I would definitely look into them.

Thanks ,i called them and spoke with one of their reps( very friendly ) I think i made my mind already , so I may be looking a little deeper but they sound like a very good option for now and their franchise fee is really good on my opinion.

[surestart12345]

If you want to get into business you need to do a business plan as in the case for any business. Figure on the high end of expenses for a year and a half to two years with little revenue coming in.
If you are to make it in most businesses you need $35,000 to $50,000 plus the ability to take care of your own living expenses without drawing from the business. That is a basic rule of thumb.
Good Luck!

[manny79]

thanks, thats exactly what i am doing as we speak ( a business plan) so far I've been able to gather a lot of information. the only thing that i have pending still is were to get the web site from.I have two options so far QQ websites & Brightfire...any advice?

[yoyowordup]

www.websites4insurance.com is super cheap ($200/yr?) if you just want a template/brochure and are not looking for anything interactive or leads driven. I think if you really want to use the web as a marketing tool you should hire someone locally that you can do timely reviews and changes with.