If you’re thinking about how to become an independent insurance agent, you’re not alone. Many enterprising entrepreneurs are making the leap.
The industry used to favor captive insurance agencies and the policy and product restrictions that came with them. But with independent agencies offering consume
rs a variety of insurance plan options that go beyond captives, the tides are turning.
Clients are shopping around, and you have the opportunity to call your own shots. Does “agency owner” have the right ring to it? This checklist breaks down how to start an independent insurance agency, from the first steps you should take to what to do to sustain your success.
Lay the Groundwork for Your Agency
Independent insurance agents fit diverse profiles, from brand-new agents forging their own paths to seasoned professionals tired of the corporate grind. No matter your story, you can follow the same basic building blocks as you navigate how to start an independent insurance agency.
Write a business plan. Your brand-new insurance agency needs some direction, so get started by brainstorming a business plan. Have a passion for a particular line
of insurance? Determine your insurance niche – such as property and casualty (P&C), commercial, benefits or a combination of those – to better customize your services, your marketing and even your long-term growth strategy.
Think about your ideal clients and the revenue targets they could help you reach. Factor in every d
emographic – including age, income and geography – plus their coverage needs and buying behavior. Younger clients may prefer digita
l interactions and value affordability, while older clients may prioritize comprehensive coverage and personalized service. Whatever the case may be, it will shape your marketing and outreach efforts.
Register your business. No two agency structures are identical, and each carries unique tax and liability implications. Choose a legal structure that supports your goals.
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Sole proprietorship: Take full control of your new agency, but remember: Sole proprietorship carries the most risk because your personal and business assets are lumped together.
Partnership: Share resp
onsibilities and financial risk equally with at least one other partner, putting your individual assets on the line.
Limited liability company (LLC): Register as an LLC to separate business and personal assets and take advantage of enhanced protection against leg
al and debt risks.
Secure necessary credentials. Does your niche and/or region require specific certifications for insurance agencies? If you haven’t already, enroll in pre-licensing co
urses and study up to pass your state’s insurance exam to earn your license.
If you’re going to work for yourself and limit the insurers your agency supports, put “Get E&O insura
nce” on your checklist. This coverage protects your business from liability in case you overlook something in your advice or services. It’s such a must-have that most carriers will look for it before granting your appointment.