How To Start My Own Insurance Business
A guide on how to start my own insurance business is helpful for those agents who are willing to break the captive chain. However, becoming an independent insurance agent is not an easy task and you should be really careful on risk management
We hope this guide on how to start my own insurance business is helpful for you.
The insurance industry might just be the career you want to take. Wonder why? According to statistics, 2.8 million people have been employed in the insurance industry as of 2019 in the U.S. alone. This shows how rapidly the industry has been growing and competing with other markets overall. Thus, it can be the best shot for you!
Who is an Independent Insurance Agent for an Agency?
An independent insurance agent is an agent that is associated with and represents many insurance companies. According to Investopedia, independent insurance agents can play a similar role as that of an independent financial advisor. They have the choice of selecting the kind of insurance lines they want to sell. The insurance lines may include personal lines such as health, life, and auto insurance, whereas it could be commercial lines such as liability and property & casualty insurance.
Why Should You Become an Independent Insurance Agent?
Unlike captive agents, there is much more scope for being an independent agent. You get to enjoy the privilege of selecting the policies you sell. Further, you can have additional source of income through commissions from renewals. You will practice more flexibility and independence in your work. Local insurance agents can make a smoother transition to independent agents as they have prior experience. Furthermore, according to records, clients also tend to seek advice from independent agents more than captive agents as independent agents have a variety of policies to offer. Clients take this as a plus point for them to choose the policy that fits their needs. Hence, it makes the client see independent agents as more reliable, experienced and knowledgeable. So, let’s find out how to become an independent insurance agent in this insurance blog.
How to Start an Insurance Agency?
You primarily need the basic things required to open an insurance agency, such as money, time, effort, employees, and extensive knowledge about insurance. However, these things are the initial requirements as you need further guidance to open a successful insurance agency and make sure that it runs smoothly. Here are a few options you can consider:
Buy a book of business for insurance agency
This is one way you can focus on building your company. When you buy a business book of an already existing insurance agency, it might cost you much as from $250,000 to $500,00 or even more. Nonetheless, they will hand you your agency. It will be similar to having a sole proprietorship.
Agency model to become an Independent Agent and start an insurance agency
This is another way you will be able to concentrate on selling insurance while your agency will receive the guidance and support it requires. You will be able to operate effectively. You can choose either one from the options described below as a form of agency model:
- Franchise Model – This model allows you to grow your business book according to what suits you, along with providing the guidance that your agency requires. However, the fees you owe to the franchisor will be high. Nevertheless, you will still be associated with a well-established brand that will add value to your agency.
- Insurance FMO Model – FMO model allows commission splits between the FMO and the agents alongside providing the guidance and help the agency needs. Usually, the split is about 70/30. This way, the agency gets enough space to grow, and it benefits both parties! Hence, if you are wondering how to start an insurance agency, this is the way to go.
Conclusion: How to Start an Insurance Agency?
The insurance industry has always been a competitive market. Hence, to keep up with the competition, a modern agency has to incorporate an agency management system and reliable insurance software. Digital transformation and insurance agency management systems can take your agency to new pinnacles. Finally, read more insurance blogs if you want to know how to start an insurance agency in Florida.
As an independent insurance agent who knows how to start my own insurance business, you can even check if you can you sell insurance from home.