Tennessee: Chattanooga Insurance Agency
Having been both a captive agent and a producer in an independent insurance agency, John Witty knows the feeling of bringing in business and being paid well for it. But for him the experience was not totally satisfying.
“I got some of the revenue off of the policies that I sold but they owned the business. So when I started thinking about what I wanted to do I knew I wanted to build something, bring my kids into it, something for our future. I realized having the income stream is nice but it’s nothing like owning your own business,” Witty said.
Last September, Witty opened Chattanooga Insurance Agency.
It’s not the first time he has gone out on his own. Before he was in insurance, he worked for a department store. When the owner sold that business, Witty opened his own retail store. “I’ve always had an entrepreneurial bent and I’ve always known that no matter what I do at some point I would do it on my own,” he told Insurance Journal.
To find carriers, he talked to people he knew from his years in the business. “I just had to say to them, ‘Take chance with me. I can’t guarantee you a half million dollars the first year but I will guarantee you my best effort and I can offer to quote you first.'”
His contacts have come through. Witty has won contracts with MetLife P&C, Encompass, Old Dominion, National Grange and Progressive. He still wants to contract with another personal lines carrier and two commercial carriers.
Witty can’t go after the accounts he wrote at his former agency but with 385,000 people in the Chattanooga area, there are plenty of prospects. He is direct mailing seven particular zip codes and getting good response.
Chattanooga has a number of other agencies. Witty said he is never the only quote on an account but he is confident he can compete for a number of reasons.
First, several local agencies have consolidated with banks, which don’t have interest in some of the smaller premium accounts he likes. He is writing business owners policies (BOPs), retail stores, small contractors, professional office buildings, along with some artists.
“We have an arts community here that has been growing over the last five years. There’s a lot of money going to painters, sculptors, welders. We’ve got some really nice things happening there,” he said.
Also, Witty feels his prospects will relate to him. “I’m a bit older. You tend to write the people you associate with,” he said, suggesting that for his customers, it’s not all about price.
Perhaps Witty’s best decision was locating his agency downtown in a business incubator park run by the Chattanooga Chamber of Commerce. To qualify for the subsidized rents in the park, entrepreneurs must have a business plan that includes insurance and they must agree to stay for three years. Witty is the only insurance agency in the park and his marketing materials are given to every prospect for the park, which has attracted 65 start-ups.
“I didn’t know that this was going to be as good a location as it has been; I can have the opportunity to write 30 businesses as they move in and out,” he said.
Chattanooga is not immune to the economic downturn. Witty talks about accounts that can’t now afford to put down the 40 percent deposit required of a new customer if they shift their business to him. “They want to come with me but can’t right now,” he said.
To finance the agency, Witty is using a home equity line of credit. His bank reduced the term of the loan from what he originally planned. “Banks say that nothing has changed but it has. It’s more difficult to get money. It cut my time frame in half,” he said.
Right now, Witty is getting help from his wife of 36 years and one of his daughters, a teacher by training, so that he can get out and sell. Within two years, Witty sees his agency writing about $1.5 million in premium and hopefully qualifying for revenue sharing with a few carriers. In five years, he says he’d like to see perhaps his son and daughter working in the business, and the family enjoying a nice lifestyle.
Other agents are also starting new agencies across the country, according to an Insurance Journal report profiling some of the industry’s newest entrepreneurs. The other profiles include:
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