Whether you are an established insurance agent or looking to jump in headfirst to the insurance industry, you may have considered the idea of starting your own insurance agency and becoming independent. But how do you start an independent insurance agency? In reality, opening your own insurance agency is not much different than opening up any other new business. Here we take a look at some of the key steps you need to take to establish your own independent agency.
1. Become a licensed insurance agent
The first step, if you are not already a licensed agent, is to become one. Requirements vary by state, so it is essential to learn your state’s licensing requirements. You will need to take pre-licensing classes, take your licensing exam, and apply for your license. In addition, you need to decide what type of insurance you want to sell. This can include property, casualty, life, accident, health, and auto.
2. Write your business plan
A business plan is a crucial step in opening any type of business. This plan outlines what you want your business structure to be and how you plan to make that happen. In your plan, you will address things like market analysis, the services you plan to offer, what will set you apart from the competition, funding needs, financial projections, and more.
3. Choose a business structure
Your basic business structure is a government classification that determines how your business is taxed and how your personal and business assets are separated. Different options include sole proprietorship, partnership, limited liability company, corporation, and cooperative. Before deciding on which structure is best for you, it is often a good idea to seek legal advice.
In addition to the basic business structure, you also need to think about an insurance-industry-specific structure. Will you be working with one specific insurance carrier, or will you offer multiple providers?
4. Get legal advice
When starting a business, it is always a good idea to seek legal and business advice before making any major decisions. This can be through a business lawyer or through the U.S Small Business Administration (SBA). Not only will these resources provide legal information, but they can help with everything new business related, from answering business plan questions to helping you navigate the business licensing and registration processes.
5. Gather capital
Raising capital is a crucial and necessary part of starting a new insurance agency. Once you have your business plan in place, you should have a good idea of how much capital you will need to get started. Various ways to raise capital can include networking and connecting with potential investors, crowdfunding campaigns, and applying for a start-up loan.
6. Register and license your business name
Before opening your insurance agency, you will need to register and license your business. This often begins with applying for an employer identification number with the IRS. This allows you to open up a business bank account and apply for a business license with the Secretary of State’s office in your local state. Depending on your state, you may also need to apply for a license from your state’s insurance department.
7. Get business insurance
As an insurance agent, you already know the importance of protecting your assets through an insurance policy. Your business is no different. Business insurance, such as professional liability insurance, general liability insurance, and worker’s compensation insurance, and just some of the insurance types you want to consider to protect you and your agency.
8. Build a relationship with insurance companies
As an independent insurance agent looking to build an insurance agency, you need to create and grow relationships with insurance companies. If you are an established insurance agent already, this may be a little easier. Joining a professional association, such as the Independent Insurance Agents and Brokers of America, can help you meet and network with different insurance carriers and begin creating relationships. When you want to work with a specific carrier, you will need to apply with them and wait for approval to sell their policies.
9. Start growing your client base
Once everything is in place, you need to begin growing your client base. In today’s technology-based world, having an online presence is a good place to start. This can include your website, as well as social media platforms. Make sure your sites offer clear information about what you offer and include contact information. From a local standpoint, joining a local Chamber of Commerce and attending networking events is a great way to get your agency’s name out there and begin attracting clients.
Insurance agency success starts with planning and the right tools
The success of your new insurance agency begins at the start. Ensuring you follow all the necessary requirements and obligations to give your business the best foundation is essential. This not only includes all the licensing and business requirements, but also the tools you choose to manage your business. When choosing how to manage your new customer data, adding the right insurance CRM & AMS to your arsenal is essential.
At Better Agency, we understand the insurance industry and the unique needs you have when managing client data, and the tools that will really help you boost productivity and sales. Created by former insurance agents, our management software is designed for you and your business. To learn more about how we can help give you a head start on your competition, schedule a call with our team today.