Whether you are a budding new insurance agent or an established professional, the idea of becoming an independent insurance agent is an appealing prospect for many. This popular career choice offers agents a more flexible lifestyle while still allowing them to help their clients meet their insurance needs and make a potentially high income.
Being an independent agent allows you to take advantage of emerging technology, such as industry-specific CRM and AMS tools, to reach new customers and the flexibility to offer a larger range of products that best fit your clients’ needs. While most insurance agents begin as captive agents, the transition to independence opens the doors to a more flexible workday as well as more control over your business and client connections.
What is an independent insurance agent?
Also known as independent brokers, independent insurance agents offer insurance policies to their clients from various insurance providers. With the ability to offer policies from multiple companies, agents can better match policies to their clients’ needs and budgets. In addition, independent agents can limit themselves to one insurance type or offer a wide range of policy types, including life, health, car, commercial, and more, making them able to address all their client’s insurance needs.
What does an independent insurance agent do?
Independent insurance agents work with their clients to evaluate their insurance needs and then find policies that match their needs and budget. On top of those traditional insurance agent duties, they are also independent business owners, meaning they are responsible for managing all aspects of their business, including administration, financial management, lead acquisition, and marketing, just to name a few. Responsibilities can include:
- Policy research: Because they can offer policies from multiple companies, they’re responsible for researching all policies available so they know which ones will best match a client’s needs.
- Building and maintaining relationships with clients: From building and maintaining a leads list to nurturing relationships with existing clients, an independent agent is responsible for every aspect. Adding an insurance customer relationship management (CRM) and/or an association management system (AMS) tool is a great way for an independent agent to manage these areas, making sure every client is taken care of, whether existing or potential.
- Completing regulatory paperwork
Answering clients’ questions: Knowing your products is essential so you can answer any potential policy questions.
- Completing continuing education requirements
- Financial management and budgeting
- Choosing which insurance companies you work with
Captive vs. independent insurance agent
Most insurance agents begin their careers as captive agents. They represent specific insurance companies and policies, and they must meet specific quotas each month or quarter. As a captive agent, you often receive benefits, such as leads provided by the company, reimbursed business operating expenses, and access to subsidized health insurance.
On the other hand, independent agents are not limited by one company. They can offer a mix of policies from various providers, often allowing them to meet their clients’ needs. They are not locked into specific quotas. However, some companies may have certain sales expectations they expect to retain a selling relationship. While independent agents do not receive fringe benefits, they often receive expense allowance payments from the insurance providers on top of their traditional commissions.
Benefits of becoming an independent insurance agent
If you are thinking about becoming or transitioning to an independent insurance agent but are still sitting on the fence, consider some of these benefits.
Independent agents do not have specific sales quotas that they must meet for each insurance company they offer policies for. However, while independent agents can offer policies for multiple companies, they often tend to work with one or two main companies. But the flexibility of no quotas allows them to offer a single policy from another company when it fits their client’s needs better as they still have that option.
Independent agents can avoid insurance company-established compliance roadblocks, as they do not represent the specific company. While there are still rules that must be followed, an independent agent has more flexibility in how they conduct their daily business as it reflects themselves and not the insurance company they represent.
Open to diverse education backgrounds
Unlike other professional careers that require specific educational degrees, insurance agents are only required to meet their licensing education requirements and continuing education. This opens the door to people with a more diverse educational history and background.
As an independent insurance agent, you are your own boss. You determine your hours. You determine which insurance companies you will work with and which products you offer. You determine where you work and how you want to service your market. However, this does require you to be a highly motivated self-starter with exceptional organizational skills.
Independent agents work to build personalized relationships with their clients. They help their clients navigate the insurance world and make the best choices for their individual needs. This often means cultivating more personal relationships with their clients, building and maintaining a level of trust, and letting them know they are always there for them. But this doesn’t mean they will be working 24/7. A good CRM tool can help schedule regular automated campaigns to connect them with their clients while focusing on other daily business responsibilities.
Build brand and reputation
As captive agents, they always represent their specific brand, while independent agents can create their own brand and reputation. What they do in every aspect of their business — from building client relationships to hiring employees, they are the face of their business.
Transitioning from captive to independent agent
When it comes to making a transition from a captive agent to an independent agent, there are no formal requirements. As a captive agent, you simply terminate your employment with your insurance company, and you can begin acting as an independent agent. However, before you make that leap, it is a good idea to thoroughly research your transition options and how to get everything into place. For example, will you still be able to offer policies from your former insurance company? Can you transition your existing clients to your new independent practice?
Be prepared to put in a lot of work at the start, especially with new insurance companies. As a new agent, you will need to contact multiple companies, setting up interviews with them to determine whether they offer policies you want to represent and whether they fit well with your goals and business expectations. Once you decide on the companies you want to work with, you must apply with each carrier and wait for their decision.
Take your insurance career to the next level
Becoming an independent insurance agent may seem like a big step, and it is. But, with the right mindset and the right resources, it offers a world of flexibility and freedom you may be looking for. Take advantage of your current knowledge and do not be afraid to try new business solutions and technology. Tools such as CRM and AMS can offer you a way to automate many different aspects of your new independent business, leaving you more time to spend building those necessary relationships with your clients.