Which Path When New to P&C?

[BradNC]

I'm new to P&C insurance after doing life insurance for several years and having clients and other people ask me to start doing it. I got my licenses and have to make a decision about how to move forward. I have 2 real estate agents asking me to take their clients' business and lots of our life clients want help with P&C too.

Option 1: Really close friend owns a very successful independent agency in another state. I'm in NC. He says I can run all my P&C stuff through them. 32% of commission on new business and 30% on renewals. They have all the built in support for quoting through support, etc. I wouldn't own the book and that wouldn't be an option. I couldn't bring in other guys either (like I have under me with life).

Option 2: Join a group cluster. I'm not sure which direction I would go with this yet, but priorities would be on good carriers, owning the book, and training/support/quoting help. I'd own the book, but it might be expensive to take it anywhere. I haven't been able to find any info on what the commission splits are, so any info on that would be helpful.

What path is the better long term decision? What will help me learn the business the best? Any other input from experience is welcome.

 

[adjusterjack]

I have been participating on legal forums for 16 years and hardly a week goes by that I don't read somebody's nightmare because he/she went into business with their "good friend" that they "trusted" and ended up getting screwed and losing the friend and the business.

For that reason alone I suggest you keep your "really close friend" and your business separate.

That's my two sense worth.

PS: Why wouldn't your "really close friend" be willing to make an arrangement with you where you owned your book? After all, he owns the agency, he can make whatever arrangements he wants to make.

 

[djs]

Lots of moving parts to your request. There is no clear answer and a lot depends on just doing a bunch of research and talking to other agency owners.

Direct appointments are the way to go if you can do it. This is the only way you 'own' your business. Your friend is just being honest with you when he says you won't own it, he has the appointment, not you. If you get an appt, he might be willing to sell it to you. It gets very complicated since he also makes a financial commitment in allowing you to write business.

Good and bad. Agents always want direct appointments but there are more 'agents' looking for them then there are practical available openings for top tier carriers. This means the carriers get picky and look for experience and a profitable book and a volume commitment and proof you can hit that volume. As a new agent, it can be VERY hard to get direct appointments, but in some areas, it is doable. You have to ask the carriers. Odds are, they won't even bother returning your phone calls.

There is a company called Superior Access that a lot of agents just starting out use. You don't get binding authority, so you have to be a bit careful in the types of risks you market for, but it gives you pretty much immediate access to several top tier carriers as well as a rater. My only caution here is it is hard to grow beyond an occasional policy with them. You cannot build a full agency with Superior Access, but it can help get you started.
Online Insurance Wholesaler | Superior Access

Insurance Noodle is another company similar to Superior Access. Worth checking out.

Several very established agents keep one of the above so they can have access to carriers that they don't write enough business with otherwise to keep a full appointment with.

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Start looking at clusters and groups. There are many out there, most with some good points and bad points. I'm not going to create a comparison chart of them all, but I will give you some hints on what I think is important to ask them about.

- Process to get binding authority. Most won't have this immediately, but make sure it will happen eventually.
- Process to get appointed with the carrier. This is usually the same as the answer above, if they appoint you directly with the carrier.
- Who gets paid by the carrier? Hint: You want it to come to you, but most don't work this way. The cluster will send you a check, minus their cut.
- Whose name is on the policy? This is usually tied to the first 2 questions. If you want to own your book you need your name as the writing agent on the policy, not the cluster. Just know this won't happen on day one, you will write through the cluster at first.
- Most importantly, know what happens if you decide you want to close up shop. Do you owe them fees for 15 years? Okay, easy workaround is to incorporate, but still, if you quit, you should be able to quit.
- Do you get a cut of the profit sharing bonus? This is a must.

Keep in mind, P&C becomes overwhelmingly crazy and is a full time gig. You can work life part time, but part time P&C agents fail fast. That isn't to say you can't have a part time producer, just understand that for you, as the agency owner, P&C will be a full time commitment.

Dan

 

[Heather]

I started my P&C book in 2011 because I saw the need my medicare clients had for an agent they could trust and I wanted all their business. I joined a cluster which turned out to be the wrong one for me. I did get out of my contract but that is an entire other story.

If the cluster promises you ABC, make sure ABC is in the contract and that there is language as to what will happen if the cluster doesn't deliver. Make sure its in writing that you are not restricted to only writing business in your own neighborhood. Find out do they have other agencies in your area. Would you be restricted from acquiring outside appointments? If you leave the group will you be able to keep your appointments?

For me my group did not deliver what was promised. They prevented me from getting sub-codes(even though they had carriers that were willing to appoint me,) and writing commercial, also writing out of my county. They brought on a very large agency a few miles from me and gave the sub codes to those guys and wanted me to give my commercial to them and receive no commission. I got out of my contract, it served its purpose in the beginning. Yes I miss having 20 carriers to choose from, but I own my book 100%

 

[EugeneM]

When it comes to money friendships go out the window.
Sounds like you are going to have a steady flow of referalls. Maybe try to get a direct appointment that can accomodate MAJORITY of the referrals you are anticipating on getting? You shouldnt need 20 markets to find a home for them and if its a referral it wont necessarily have to be the cheepest.... Then Maybe wholesale or refer out what your carrier declines?

 

[dorado]

Same as you, I transitioned from L&H to P&C as well. The main thing in P&C is to own the book. Any deal with anybody has to be spelled out in writting. It is interesting to see how people change their minds to do what is in their interest without regard to ethics or doing what was agreed on. I would not recommend you to go with your friend because he is not letting you own the book , not even eventually. I think that partnering with another agency is a good option, but again agreements including exit strategy has to be in writting and has to be a win win.
I agree that being the agency owner you have to do P&C full time. If you hire producers, make sure you have them sign non compete and confidentiality agreements. Your inventory is your BOB.
Good luck

 

[BradNC]

Thanks for all the input. Are there known places to look that will let me own my business, treat me fair, and in turn get a fair percentage of what I write? It's important to me to have good carriers, have access to a software/quoting system, etc.

 

[adjusterjack]

Thanks for all the input. Are there known places to look that will let me own my business, treat me fair, and in turn get a fair percentage of what I write? It's important to me to have good carriers, have access to a software/quoting system, etc.

I'm guessing that there are millions of agents on line ahead of you waiting for that ship to come in.

 

[indienoise]

No matter what you choose, there will be disadvantages - even though I chose not to join a group, and it has been working for me, there are still things that being part of a group would help with...but there is always a trade-off.
Nothing is perfect, you just have to pick the route that best aligns with your long term goals.

 

[VolAgent]

Indienoise never joined a cluster or aggregator (unless that has changed?), and it has taken him time to get preferred appointments direct. So he was busy writing non-standard for quite some time, but he also had lead sources for it and he didn't have to give up anything to a cluster.

There are others that joined a cluster from day one and had access to preferred markets from day one, but they had to give up revenue to get it. They also may have a buy out or given up ownership of the book. But they got direct access to preferred markets immediately and they are getting bonuses right away that make more than make up for the lost revenue.

There is no right answer to this, you have to pick your poison. Go with the one that best aligns with where you want to be and what you are willing to accept.

Is it more important to have complete control or is it more important to have preferred markets? Also, keep in mind that complete control is still an illusion. The carriers can pull your appointment whenever they feel like it. A cluster can help fight for you, but even they can't overrule the carrier.