Starting As an Independent Agent. Help

crabtrap

Expert
97
Hi guys,

I just got my P and C license and am wondering the best way to get started selling on my own? Should I go to one of the big outfits and start a franchise?
Start with someone else smaller?

I a looking to cater to a specific demo and sell primarily auto and renters insurances if that helps. Mainly state mins and apartment coverage.


Thanks for your help
 
Hi guys,

I just got my P and C license and am wondering the best way to get started selling on my own? Should I go to one of the big outfits and start a franchise?
Start with someone else smaller?

I a looking to cater to a specific demo and sell primarily auto and renters insurances if that helps. Mainly state mins and apartment coverage.


Thanks for your help


Sounds like you have a solid business plan here to funnel preferred business your way (state minimums & renters are a great way to build a long term profitable book.) You should market boat & snowmobile insurance too (accounts w/ toys retain 10% better.) Maybe even sell pet insurance? :)
 
Not sure what area you are in but here in my little NY town I 'll give you an example of how it is. I sold a state min policy yesterday it was $351 for the entire year, So I made at 10% commission - $35 for the year on this person. Their small $5k renter policy was only $125 for the year, so I made like $20 off that. Here's the fun part since I am with a cluster I owe 10% of that $55 to the group at the end of the month.

Not to sound mean you are going to need a massive volume of customers and the more you get the more support staff you are going to need. These people are always non-pay, they want to come in a pay cash in person, they run up a bill with you then jump ship to geico. I have some that I have had to re-write 4 times because of non-pay, they always have claims left and right.

Try to find a better mix of customers and a good grasp on what commissions actually are and what expenses are for a new agency.
 
Where to start.

If it sounds too good to be true it is. If it is true it wont last, it is a new group who have not figured out the profit margin, or it is a group that will fail at providing you one of the four prongs: Training and support, Carrier Alignment, transparency, or an industry leading contract. (Most fail at the training and support piece.)

Too many agencies think they can play the aggregator game and they try and they fail, and the agents that join them are upset.

Here is a good exercise. Write down all the things a well-established agency needs to do and track on a daily basis. (Conversion ratio, deposits, lead sources, Employees, comp, the right comp, the trash can, leads, their best closers/ sales people, admin, the state regs in the state(s) they do business, the carriers products, commission levels, accounting, and on and on and on. NOW DO the same thing for but for an aggregator! The List multiplies by 2000.


Groups range from Good, Better, Best. Groups should deliver on four things. (Listed above) Of the four things most agents look solely at the contract and make mistakes. They do that because the contract is quantitative. New agents disregard the other three because they are qualitative and harder to define. Don't be that agent. Take your time and define those prongs.

If I had a 2 carat diamond ring on my wife's finger and one of the four prongs was loose or got knocked off I would fix it in fear that she was going to lose the Diamond. Don't settle for establishing your small business with 3 of the four deliverables.

My wife does not have two carats let a lone one. We got married young. I have since offered to upgrade the little rock I got her, but she is sentimental and I love her for it.
------------------------------------

Regards,


Shawn M. Walker
Vice President
Premier Group Insurance
720.335.3799
Captive: Prisoner
Independent: Freedom
 
It's not necessarily a bad plan, but understand what you're getting into. You will probably be seeing or talking to these people multiple times every month. Many will be paying after their due date, so make sure your carriers have a grace period and your customers understand how long they have before cancellation and understand how late fees are figured. You'll probably still have to call them with reminders to pay to avoid cancellation. Expect a fair amount of cancellations and rewrites anyway. They also may change vehicles more frequently than typical customers.
If you have the standard 80/20 on MVR's, expect to have to pay for some reports, many people in this market either think they're going to get by without you finding out about their accidents and violations, or they're just not too bright and really just DON'T remember what's on their record.
If you live in an area with a large low income demographic like I do, it's going to be really easy to sell nonstandard, minimum limits, etc. It can get you up and running, and getting the endorsement of a couple of established local businesses can get you a large, loyal customer base, especially if you find some regional nonstandard carriers who will give most of these types of customers a significantly better rate than the "big" nonstandard companies, at least the ones that do have to have comp & collision.
The upside to this sort of business is the premiums are higher, and some of these regional nonstandard carriers actually pay comparable commissions to standard carriers. Of course, that means chargebacks will be bigger as well, so it goes both ways.
Find one or two really competitive carriers that like the mid-market segment. That don't mind if you have minimum limits, or the next step up from them, that don't mind an accident or violation on their record, and aren't necessarily looking for multi-line to be competitive. Get some of these customers some prior insurance under their belt, and take the time to advise them so they know how to help themselves as far as insurance is concerned, and some of them will actually become loyal, long-term customers. A lot of these folks seriously think it's going to save them money to cancel their insurance for a month or two until they find a new car. I can't tell you how many times I've had to talk someone out of this, and really explain to them why. They really don't know how insurance works. Some people will still always be a pain in your side anyway. The thing you need to ask yourself is, if you write this sort of business, do you want to continue doing so for the rest of your career? If not, have a plan to get out of the nonstandard business. There are a lot of these types of agencies in my area, and many of them are only around for a few years, and it's not for a lack of business. Have a plan in place NOW.

If you find it difficult to stomach what I've just described, then consider doing something else.
 
Last edited:
Long story short....state minimum limit clients are 99.9% worthless bums. Not worth your time.

If you want to truly take advantage of what this business has to offer you NEED to be retaining >90% otherwise you'll be spinning your wheels after a few years & growth will stop. You arguably should be retaining around 95% if you have solid carrier representation & a solid retention plan. You CAN NOT get here on state minimum bum business.

Bum business will peak quick & then your income WILL stagnate. It's simply numbers & this non standard state minimum bum business does not & will not retain well. Some Nationwide guys may toot their horns saying how great their bums retain & if that's at all true...it's the result of a local anomaly in the market.

If you're OK peaking your book after a few years & constantly recycling bums in 1995 civics while watching your income stay static...by all means go ahead.
 
They have some points. Yes. Can you charge fees in your state? that changes things a bit.

There is real money to be had with Ins1822's "Bums" but it has to be doing right. Those on this forum are speaking the truth about retention, buying habits, paying habits of this clientele. However, you can make it work. Economies of Scale.
 
Back
Top