How Do Independent Auto Insurance Agents Work?

Apr 3, 2017

  1. prateek07
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    prateek07 New Member

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    Hey,

    Just got laid off from my previous job. I'm thinking about becoming an independent auto insurance agent. I've done some research about the market and read through the threads on this forum.

    But...

    as an independent agent, can I work with all the major insurance companies like Geico, AAA, AllState, StateFarm, Farmers, Progressive, Amica?

    Do these companies have different commission rates?

    Thanks in advance!
     
  2. BlockO
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    BlockO Guru

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    half of the companies that you mentioned only hire captive agents. and geico doesn't use agents at all.

    but if you have no experience, you're really putting the buggy in front of the horse here.
     
  3. djs
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    djs Super Moderator Moderator

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    For the record, in some areas, Geico does have agents with offices and everything. They are captive though. Not sure if they have done this nationwide, but they found they lost a lot of sales because people wanted a live person so they opened some random offices.

    To the OP, there are 3 types of carriers (mostly):
    - Captive: This is State Farm, Farmers, AAA, etc, where they have their own agent force and don't use independent agents (this is a generic statement, I think all captives have a state or 2 where they at least at one time had independents)

    - Direct Writers: This is companies like Geico, Progressive, and others where you log onto their website and basically write your own policy.

    - Independent Carriers: This is like Safeco, Travelers, Mercury and others where they sign contracts with agents to allow them to sell their product.

    Then, add into this you have Preferred carriers, standard carriers and non-standard carriers.

    As an independent agent, you need to find carriers that will allow you to work as an independent agent. Sounds easy, but getting appointed is not as simple as filing out some paperwork, at least not in all areas.

    What carriers are available all depends on where you are (what state).

    The carrier will look for experience, profitability, growth, underwriting performance, problems and what color socks you are wearing (okay, ignore that last one, but you'll wonder somedays....)

    Good luck.

    Dan
     
    Terry Calvert likes this.
  4. jayorleans
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    jayorleans New Member

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    Do you like the sporting nature of sales if not steer clear because most get burned out quick
     
  5. adjusterjack
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    adjusterjack Guru

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    In addition to what others have written, you will first have to get licensed.

    You don't say where you are but licensing typically involves some serious educational requirements along with an exam. Sometimes the equivalent of 12 credit hours, sometimes 24.

    I suggest you look up your state's licensing requirement and decide if you want to make that effort before you even start on getting an appointment.
     
  6. InsuranceNerd
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    InsuranceNerd Expert

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    Being in the business for a little over 10 years I ask you ... WHY?? I'm kidding.

    I always tell people who are getting into this business to consider working for a captive carrier (as defined by djs above) for at least three years before going independent. Captives will pay the cost to get you licensed and have the appropriate training before consulting insureds. Also, when working for a captive, you can diversify your product offerings rather than just selling auto insurance.

    Best of luck to you!
     
  7. Heather
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    Heather Guru

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    I would go work for an agency to learn the business. Even if you are licensed carriers are not going to give you a contract with no experience and no clientele. If you have a serious amount of cash on hand there is always the captive arrangements like Allstate and Farmers. You need cash anyway to build your book for instance in NY there are carriers that pay as little as 8% commission(sometimes as earned). Find your niche, mine is medicare. There are at least a dozen agencies in walking distance of my office selling the same type auto/home products but I am the only one open Saturday and the only one offering Medicare.
     
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