Possibly Expanding into P&C, Need Guidance

[chp]

Hi everyone, have a couple of questions for you that I hope you can help out with. We have a small life and health insurance agency here in Myrtle Beach, SC. We have been in the business for about 8 years, and went independent about a year ago. We just opened up a small office, and are in the process of hiring telemarketers to help generate business.

I happened to interview a licensed P&C agent the other day, and she seems like a real go-getter. I have hired many agents in my career, and she sticks out like a great person. Anyway, I would like to try and break into the P&C market, perhaps have her start to generate a book of business for the agency. My wife and I are both licensed in L&H only. We plan on hiring L&H agents in the spring, but I would like to see how I could bring this P&C agent on board and have her write business under our agency.

1. I assume I would have to get my P&C license, as well as our actual agency. I am not too concerned with that, but I assume I have to??

2. I know it is next to impossible to get appointed with P&C carriers without a book of business/experience. I have looked into Superior Access, and a couple of others to see about getting appointed through them. Again, we would like to slowly get into this business. My goal would be to have her run that side of the shop. Here is a problem I am running into...we live in Myrtle Beach, on the coast of SC. It seems like these large wholesalers (is that what they are called, S.Access, etc.) have very limited options for counties along the E. coast...wind zones etc. Do any of you know how we could get set up to begin writing P&C? Any suggestions, options will be GREATLY appreciated.

Thanks in advance!!

 

[djs]

Why did you interview the P&C agent? Were you looking for a L&H agent and then found out she was P&C licensed?

The next question is why is she interviewing with you if she wants P&C? Yes, I always look for motivation. This may not be a problem, but I always ask.

I can't help with anything in S.C. I don't do business there. In general though, there is a pretty huge startup cost for P&C, it's much tougher to get into than L&H. Read the State Farm thread, this is probably more true in every P&C office than is realized. Office, marketing, furniture, phones, staff, etc. In addition, as an independent, you'll have things like E&O and an agency management system.

All of this isn't much of a problem for a dedicated agent, working full time, knowing it will take a few years to really build the business. It's hard to see a profitable model where the primary revenue is driven by a producer who will want a good portion of the revenues. It can be done with the right producer, just much tougher to do.

It can be done, but you'll have to consider what happens if she leaves. Worse yet, she leaves and takes the business with her, which will happen regardless of the contract.

Dan

 

[chp]

Dan, Thanks for the reply.

Her situation is she is just coming off of Maternity leave. She worked for a large P&C agency in the upstate of SC, and moved with her husband to the beach while 5 mo. pregnant. Decided not to work until after the baby, and things settled down. I am sure she can get a job at an existing agency, but I think she likes the challenge of building something. From my end, I am just looking to see if this makes sense.

We just opened up a decent sized office (so cheap in this economy), have all the furniture, phone lines, net, etc. in place.

I have 1mil/1mil E&O now, but assume I would have to increase/update it? Any ballpark idea of what that would cost?

I know it would take a lot of time and dedication to build it, I have built my health business over the years, and still look for room to grow. If it would help me grow my agency, and expand even further in the coming years, I am ok even if I break even for a few years as far as the P&C income/expense. My goal would be to expand that side of the house as I am expanding the health side of our business.

I would assume that all business that she writes would be in the agency name, and of course if she leaves, I assume what she writes would leave with her, regardless of the contract. I was just hoping this could be a way to get my foot in the door..let her get it up and running, and let her have a large cut of it. I think she likes the idea of the future potential she can have, based on our conversations.

Thanks again for your advice and insight, and any other info you have will be appreciated!

 

[1manshow]

Have you spoken with any regional carriers ? Seems like they are the ones still writing business when the larger national carriers pull back. The smaller regionals also are the most likely to give a start-up P &C agent a contract. My experience is that their rates are the most stable as well.

 

[djs]

chp - Sorry, I haven't seen this thread in a while. There are a couple of things to be aware of. First, you'll need P&C E&O, which is significantly more expensive than life and health. I'd guess you are looking at $3500 a year minimum, but you would have to get some quotes for this, and also find a carrier willing to take you.

South Carolina - beach - may be a problem. I don't know much about the P&C market outside of California, so you'll have to do you're own research, but, I would look to see who will write beach area home policies. Then, see if you can get appointed with any of them. If not, you may have a problem getting out of the starting gate.

To be successful in P&C, you need binding authority. In life & health, you don't have this, but with P&C it's almost a requirement so homes can be sold, cars can drive off of lots, etc. Without binding authority, you lose a major motivating factor on why people shop insurance in the first place.

Of course, with the right producer, you can make all of this work. There are some hurdles to jump though.

Dan