On the heels of celebrating its 10-year anniversary, Jacksonville, Fla.-based Brightway Insurance, a national property/casualty insurance retailer selling through a network of franchised independent agencies, has unveiled a no-upfront cost program for independent insurance agents that offers a path to ownership of their own Brightway agency.
It also offers a way for existing independent agents to grow and open additional locations.
Describing it as “going all in” on the independent insurance agency channel at a time when some are questioning its future, Brightway Insurance Co-Founder & CEO Michael Miller said the new distribution model is designed for agents who have dreamed of being their own boss and owning their own agency but don’t have the financial resources to get there.
“We are 100 percent committed to the independent agent channel,” Miller said. “We’re betting everything that there are fantastic people who work in insurance today who would love to build their own business, be their own boss and have an organization like Brightway support them … and we’re excited to do it.”
The new commission-based agent program, called “Independent Agent,” gives experienced property/casualty insurance producers access to the Brightway system, which offers its agency owners resources and support to run their business, to start selling insurance while simultaneously qualifying for franchise ownership. The new model is different from Brightway’s current franchise system because it works as a 50/50 commission share model where agents have no upfront costs and can start profiting immediately, Miller said.
Under Brightway’s current business model, launched by Miller and his brother David back in 2008, people without insurance experience can be selected by the company to start a Brightway Agency and use the company’s technology and support services to run their business. Individuals pay a $60,000 initial fee to purchase their agency franchise, which requires them to operate a retail location with a minimum of three staff. Retail stores handle the day to day operations, including quoting, binding and customer interactions, and the central Brightway Insurance office handles the carrier relationships, customer service, marketing, accounting and technology.
How the New Program Works
The Independent Agent model offers a “first step” towards becoming a Brightway franchise for experienced personal lines sales people, Miller said. Agents can do business out of a home office or other location without having to employ a staff. After one year – or sooner if agents meet the Brightway sales goals – they qualify for a fully financed, lower-cost entry fee of $30,000 into Brightway’s new “office location” franchise model where agencies operate in a professional office space with teams of up to two people.
This new franchise model differs from Brightway’s existing model that requires agency owners be located in a retail space where they can build large sales teams, and reduces the current model up-front franchise fee of $60,000 as well as ongoing operating costs.
“I think about these options as opening doors to the Brightway system. Based on your background and goals, you can choose any door you like—Independent Agent or a franchise located either in an office space or a retail location—and grow in the direction you want,” Miller said.
The commission split on the Independent Agent program is 50 percent renewal/50 percent new business. Agents are required to have personal lines/property casualty sales experience – preferably two years – to be eligible for the program, unlike Brightway’s existing franchise model that doesn’t require agency owners to have any insurance experience but instead offers onboarding and training processes. Retail agents can bring over their current books of business and any carriers they work with that are not already affiliated with Brightway.
Agents are given a six-month contract for the Independent Agent program with one renewal option for a total of one year under the program. Miller said agents must meet the Brightway sales targets of selling a minimum of four new policies a week for at least an eight-week period to qualify for the next step – the new office location franchise model where Brightway finances the $30,000 franchise fee.
Agents can move on to the new franchise model before six months or a year if they meet the minimum requirements sooner, but the Independent Agent contract does not go beyond a year.
“The Independent Agent model is not a forever state – it’s an entry point,” Miller said. “It’s designed as a way to get started and help [agents] be profitable from the day they leave their day job as a producer or [current role] in the insurance industry to becoming a full franchisee. It helps them transition.”
New Brightway Independent Agent, Franchise Model Option
|Retail store||Office location||Independent agent|
|Insurance experience||None||Personal Lines property/casualty sales||Personal Lines property/casualty sales|
|Commission Split||85%-100% new/55% renewal||80% new/50% renewal||50% new/50% renewal|
|Ability to grow an enterprise (multiple units)||Yes||No||No|
|Contract term||5 years with unlimited renewals at no cost||5 years with unlimited renewals at no cost||6 months with one renewal option before becoming a franchisee|
|Holistic business support||Yes||Yes||Yes|
|Staff required||Minimum of 3||Maximum of 2||Maximum of 1|
|Location||Retail space||Professional location||Work from anywhere|
If agents move into the office location franchise model, they will own an economic interest in their book of business like all Brightway franchisees do. However, if someone starts as an Independent Agent and decides not to become a franchise owner, their customers will stay with Brightway to ensure their coverage and service are not disrupted.
Miller said the new office location franchise model is designed to help people who want to build a business but don’t have a large amount of money to invest to open a full retail store with a large team. Agency owners under this model can still access the full array of Brightway resources and work with all of Brightway’s carriers, and the reduced franchise fee of $30,000 is fully financed by Brightway through a seven-year loan at a rate of prime plus 2 percent with a floor of 10 percent.
Agents can remain in this franchise model indefinitely if they choose, Miller said, but to grow to a larger business with multiple franchise locations they’d have to transition to a traditional Brightway retail store agency owner.
“What we’re really doing is moving to where we have created different options to allow people to not only engage with Brightway at the level that is right for them to begin with, but even move between these different models as they choose to grow their businesses,” Miller said.
Miller said Brightway is looking to partner with about 100 agents in the first year of the Independent Agent model in 21 states of the 22 states where it currently has franchise location stores (Ala., Ariz., Calif., Colo., Ga., Ind., Ks., La., Mich., Mo., N.Y., N.C., Okla., Pa., S.C., Texas, Wash., Tenn., N.J., Ill., and Wisc.). Because the company already has many retail stores in Florida, it is not looking to deploy the Independent Agent program in the state at this time. That said, Miller noted they could consider communities in Florida where Brightway is currently under-represented.
Brightway’s Road to Success
Miller said through the new Independent Agent program and franchise model, Brightway is evolving into a “more robust insurance distribution company – not just a retail franchise store concept.”
“We are creating a program that helps people who would like to eventually be a franchise and own their own business, but don’t have the money today. They now have a path in Brightway to get there with no cost,” Miller said. “We saw an opportunity to partner with a whole other group of people who we believe are fantastic and for whom our existing franchise model simply is not attainable.”
That existing model has been wildly successful in the 10 years since it was created by Michael and David Miller, the latter of whom started in the insurance business in 1993 as an employee agent with Liberty Mutual. The two brothers came up with their Brightway franchise concept after David started his own agency in 2003.
In running that business, Michael Miller said the two brothers realized there was a better way to do insurance business, and thus the Brightway model was born. Today, the company boasts nearly $560 million in annual premium, with 178 Brightway agencies in 22 states doing business in all 50. Last year, the company opened 39 new stores and plans to open 40 more in 2019.
The company’s success is often recognized. In September, Brightway was named a “Top 20 Agency Partnership” by Insurance Journal for the fifth year in a row. On the national list that ranks only aggregators, clusters and franchise groups by 2017 revenue, Brightway ranks 14.
Another example of how what it is doing is working, according to Miller, is its retention rate on customer policy renewals, which is more than 90 percent.
Brightway’s growth over the last decade has been beyond anything they could have anticipated when they started, Miller said, and he believes a big part of that is because of the value Brightway agents bring to their customers.
“We have a very specific value proposition and one of the value propositions that to me defines us, is the local relationship, the expert consultation, that lifelong relationship that we give our consumers,” he said.
But that growth hasn’t come without its challenges either. At the beginning of the business model they “invented,” Miller said, “everyone was a naysayer.”
“The idea was very unique to Brightway and so at the beginning it took years and a lot of delivering of fantastic results to convince people that it’s actually good,” Miller said. “At first, it’s a belief, but then after years of actually delivering better outcomes, it becomes fact.”
It is because of that success that launching the new program has been well received by Brightway’s carrier partners, Miller said. Brightway consulted with the hundreds of carriers they work with across the country in vetting the program and all had a positive reaction to the new concept.
“The results we have delivered to our carrier partners is fantastic – from $36 million in written premium in 2008 to $559 million in 2018 – and so they look to help us grow even faster because the business we write with them has been really good for them,” he said.
For those already in a Brightway retail agency, Miller says the new office location franchise model can help them grow their business as well. Current agency owners can opt to open a second location with fewer staff and without having to open a full retail store location, and the $30,000 franchise fee can be waived. Brightway also started a multi-unit program last year for traditional franchise agency owners who open additional retail stores for the $60,000 franchise fee and Brightway can waive the fee if the agency stays open a minimum of five years.
“We just believe so strongly that if you take someone who’s already good and you help them grow, that the numbers will work, and we’re willing to take the risk,” he said.
As for the risks of this new model, Miller says he doesn’t see any because the company believes they are investing in insurance agents with experience and passion for the business who want to grow, and he is very excited for the company’s future because of that.
“In fact, these new models are designed to speed up growth and reduce risk for all parties because we’re partnering with people who are proven to already be good at selling insurance,” he said. “There just has never been an opportunity for someone to take control of their future in this way without a significant risk and actual costs.”
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