The Four Fundamentals of Starting an Insurance Agency

Being an independent agent for insurance can be rewarding, thrilling and lucrative.

Insurance is a relationship-based business. It’s satisfying to protect individuals, families, and businesses from certain calamities in life. It can be very lucrative to sell insurance. You can build residual wealth by recruiting associate agents and offer income opportunities to other people. The freedom and flexibility are unmatched.

You must quickly get your agency up and running, as with any commission-based business. These are the four essential steps to give your agency a solid start.

Get the necessary licenses (if you are a new business owner)

  • You can prepare for the state’s insurance exam by studying books, taking online courses or working with professionals.
  • Separate exams are required to determine if you have life or health, as well as property and casualty.
  • Uniform licensing standards are increasing in popularity, as well as reciprocal licensing between different states. This allows you to be licensed in multiple states quite easily.

Part ways to work with your existing MGA or Captive Agency (if you are already in business)

  • Check to see if your agreement contained a non-compete provision. An employment lawyer can help you determine if it is binding. These clauses can be void in many cases.
  • Determine if you have any business book that you can take with you. This is a great foundation for your agency.

Start Your Own Agency Website

  • Choose a formal business structure (corporation, LLC) and submit the necessary paperwork to your state.
  • Locate an accountant who can help with your bookkeeping and commission breakouts.

Choose the Right Master General Agency

MGAs offer administrative, marketing, and sales support to thousands of independent agents. An MGA will help you grow your business faster. They have access to top-rated insurance companies and high commission rates.

Choose carefully who you partner with. You should be able to offer the following:

  • A broad product portfolio with multiple insurance lines that can be tailored to your clients’ individual and business needs.
  • Carriers pay MGAs contingency bonuses for producing large amounts of business. These bonuses are not shared by all MGAs. You can confirm with the MGA that they are willing to split your contingency bonuses, or find another MGA who will.
  • The MGA should prohibit agents from competing against each other in the same geographical area. Agents should feel like they are teammates.
  • Carrier appointment paperwork – Some applications can run 40 pages long, so your MGA should handle all of this paperwork.
  • MGAs offer turnkey solutions for traditional and digital marketing, including e-marketing and social media.
  • MGAs who specialize in business coaching should be able to share their industry knowledge with you. They can help you avoid potential pitfalls in your startup and maximize your earnings.
  • Fully integrated technology-The most productive MGAs have invested heavily in agency management systems that increase productivity. The system should have a comparative rater to quote multiple carriers, an e-mail marketing platform, lead generator, and other features.

Independent insurance agents are in a great time with the amount of support and automation available.