Can anyone give me tips and information on the process of how to open your own independent insurance agency? This is my goal and I would like to know how it is done.
How do you create your business name? Who do you go through? I don't understand the whole appointed thing! How do you get contracts with the separate bigger insurance companies so you can write policies for them? If anyone has info, please let me know! Thanks
Mary
You need to get you're license and then go onto Sunbiz.org, to register a fictitious name. You can be guided by sunbiz.org to start a business in Florida. Also, I am looking for a partner to start an agency with. I was a full service broker in New York, and was originally trained and licensed with Allstate Ins Co. . My name is Steve and I reside in Hudson, Fl West Coast. New Port Richey and Springhill area. You ca contact me by e mail at finest27814@yahoo.com.
Steve
How do you make contact with insurance companies to sell policies? Also - I know sunbiz is the contact to start a business in Florida, but why do you use a fictitious name?
Jan
Having been an agent and agency owner for 16 years in Florida, I would strongly discourage you from going it on your own without first working in an agency for at least a year or two. That's where you make the company contacts and that's where you learn the million and ten things you will need to operate a insurance business that having nothing to do with the coverage information you've learned in this class.
Companies don't just show up and appoint you because you want them to — and you are not a licensed agent until at least one general lines company appoints you. They are very selective, generally, and often hesitant to appoint a new agency. They are concerned about knowledge, experience, integrity, capital, volume, loss ratio, location, mix of business etc.
In theory, you could first indentify those companies you think you want to represent and then contact their agency manager and inquire as to an appontment. Even well established agencies never obtain every market they want. Obtaining the right mix of carriers takes years and is one of the most difficult tasks of running a successful insurance business. Often it is just a matter of knowing someone and that's why it's important to work at any agency first where you can meet and greet company field reps.
No offense, but I don't think you have any idea the complexities of operating an insurance agency. It's as challenging a business as you are likely to find. If you don't know yet how to "create a business name," you really need to further your education by working for an ongonig agency until you have a full understanding of business in general and the insurance business in particular.
Good luck!
Although I have never had to acquire a "fictitious" name, I personally have a deep understanding of the complexities of operating an insurance agency. I have worked as an operations mgr for the 5th largest P&C insurer for many years. My point in responding to this email chain was for Mary to receive quality feedback from someone who has an in-depth understanding of the requirements for startiung an independent agency. You did an excellent job of providing that information. - Jan
Although Ron states some valid facts, he seems to want to discourage one from attempting to start their own Independent Agency. I'm sure some of the agency owners he knew tried to discourage him from going into the business years ago. The truth is the Insurance business has been a tough business for years, just do some research, and read publications like Rough Notes and you will learn the difficulties the insurance market has had over the years. True, in earlier times companies were quick to appoint agents, no matter what their experience was, and many failed and many succeeded. I mentioned to Mary, the first thing she needed was to establish a fictitious name, and to visit Sunbiz.org to register the name. There are many steps to establishing a business in the state of Florida, and all can be found on Sunbiz.org.
I further mentioned to Mary that I was looking for a partner to start an agency with. I was an Independant Agent in New York, and I was trained by Allstate Insurance company back in 1996. I spent several years in the business as an affiliate agent and producer for other agents and brokers. As Ron mentioned, there is a learning curve that goes along with any business venture including training and spending time in the trenches. Mary, if you have no experience at all, then you need to work for an agency, and build a book of business. Remember that book will be owned by the broker you are employed with, and when you feel you have enough experience and decide to leave the agency, he or she will most likely make you sign a non-compete clause if they do not have you sign one in the beginning. You will not be able to keep you're clients as they are the brokers clients. Ron fails to mention that in the beginning a new agent may be able to get appointments by MGA's to place business through and establish a track record for the direct appointments to look at.
Mary, you also could hook up with an experienced Agent willing to partner and train you in the business. You would be able to gain their experience and establish a book of business you would own. The companies would allow you to place business through the experienced agent, and upon establishing yourself, then begin to give you your own appointments. Look around for an experienced agent partner, who may need to have additional help in starting up an agency. I was vague in my first response to you because I did not know you're background and assumed you had some experience, since you were looking to start you're own agency. Ron's response prompted me to reply to you and Jan a second time. Remember, that any business regardless wether it is an Insurance Agency or a SubWay will require many hours of work and you will be working for free in the beginning. You will be spending more money than you will make and putting in 10 to 14 hour days instead of 8. It will be very hard and frustrating and in the end rewarding. Ron, sounded like the agent of doom as alot of them do, but he made some valid points. above all do not write a piece of business with out an Errors and Omission policy in your name. Even if you produce for someone else! You will be surprised what an attorney will sue you for in today's world! Especially in Florida!
Steve Papola
Agent of doom? I said nothing to discourage Mary from opening her own agency - only that she acquire sufficient experience and knowledge first - which is pretty much what you went on to confirm.
The paperwork required to open a business or form a corporation in Florida can be accomplished in a morning. It's only a hiccup in the entire process of opening an insurance agency. Much more challenging will be find the right location, negotiating a lease, rounding up the furniture, trade fixtures, computers, rating, management and accounting software, establishing a relationship with a good CPA and a good lawyer, arranging for signing, advertising, business forms, acquiring occupational licenses, registering your agency, establish trust accounts, purchasing insurance, forming a marketing plan and finding sufficient funding to get you through at least a year of operating losses.
Further, you are dead wrong on the MGA comment. You will not be able to get appointments by MGA's or even open your door for business until you have been appointed by a general lines company. Check F.S. 626.112 (1)(a) PG 215 in your manual. MGA's normally do not appoint agents - they use brokers. See F.S. 626.742 and note in particular paragraph (2) which states "an agent may place with an insurer for which he or she is not an appointed agent only such business for which he or she is appointed and which the insurer by which he or she is appointed is authorized to write." (PG 234 in your manual.) This means that if you have a single appointment by an insurer who writes only auto, you will not be able to place fire insurance or mobile home insurance or contactors insurance via an MGA.
If Mary hops from her license exam to her newly rented office, she will have nothing to sell and will not even be able to legally discuss insurance with a potential customer until and unless she is appointed by an authorized insuror and then only for those lines for which she is appointed. She will have to keep the door locked and the sign down until some someone comes around and agrees to license her. That could take months - or longer - or never.
These relationships are normally arranged in advance by persons already operating in the industry or often by a purchase of an agency or the forming of a partnership with an existing agency.
From a carrier's standpoint, you must understand they are not exactly falling all over themselves to appoint absolute novice agents who have yet to sell their first insurance policy and can give no expectation or committment of volume. I would estimate a person opening an agency under these circumstances would have less than a 5% chance of success.
Now Mary can read both assessments and decide who knows what they are talking about - and who doesn't.
If your primary goal is to "serve the public," I would recommend the priesthood or the Peace Corp. Insurance is a commodity. It's a business. While one should always operate under the highest ethics while being keenly aware of your professional responsibility to your clients, I would suggest that your primary goal as an insurance professional should be to earn the best living possible.
I will never forget the keynote speaker I once heard at an insurance convention who proudly stated: "I never worry about commissions. I worry about my clients and the commissions take care of themself." And they did. Six months later he was out of business.
Just my two cents.
Denise - Philosophies differ and you will find professionals on both sides of the issue. I've owned businesses for 32 years including 16 years as the owner of a multi-office P&C insurance enterprise in Palm Beach County and so have some experience dealing with this issue.
Succinctly, I believe you do the best job for your client when you put the proper and profitable operation of your business as first priority. Unprofitable insurance agencies run by demoralized personnel are the biggest threat to an insurance consumer - no matter how lofty their intentions or how focused they may be on serving the public. Such agencies are anything but rare.
However, "NEVER considering commissions when doing business" is not something I'd ever recommend. Commissions are your lifeblood and your business's only source of funds available to 1) pay all your business expenses and 2) to feed your family. Those two items are very important to most business owners.
Now ask yourself this: If you represent two companies and Company A offers a policy at 17% commission and Company B offers a slightly better policy at 3% commission and your operating cost averages 15% of premium volume - are you going to sell the 3% policy? At a 12% loss? I sure hope not, because your business won't be around for long. But doing so would be putting the client "FIRST" by your definition.
Do you realize, in the example above, that Company B can afford to offer a slightly better policy because they've taken the money from you, your business and your family to do so? Try explaining to the landlord or FPL or the phone company that you can't pay your obligation this month - but it's OK because you've been "putting the client first."
One thing I can assure you: There isn't some magic at work in the insurance business where if your motivations are sufficiently altruistic you are guaranteed a profit. And if you don't make a profit in the insurance business, it's not like when a coffee shop or a hair dresser goes out of business. When insurance agencies go broke, they inevitably take premium dollars with them. And the next stop is license forfeiture and possibly jail.
I stand by my original post. Clients are best served by a profitable agency with well-paid help. You can only achieve that by ALWAYS considering commissions. That does NOT mean you will always sell the highest commission product, but it does mean putting the proper, profitable operation of your business as a priority.
Ron
Ron, things are not so simple or clear-cut as they appear.
As you are about to get your license, you should always place the Interest of Your Clients before your own. Don't get me wrong: We're all in it with hopes of making a profit. But without a good client base, we will fall short of succeeding. Always remember when that Customer Satisfaction is the Key to a Successful and prosperous business.
Customers nowadays have are better educated than in the past because they have more access to information, which in turn prepares them to make better business decisions. In other words, they shop around before spending their money. Also, they will do business with companies that help them save money, no matter how small the savings may be.
I hope that business leades will learn from this economic downturn and realize that it's ok. to earm smaller profits to the benefits of both investors and consumers. Any other business is doomed to failure.
A satisfied customer is a customer for life.
Thomas -
Somewhere, you have entirely missed my point.
No where do I advocate not taking care of your client or misleading them into making foolish business decisions. My point was that a business owner/insurance agent that puts the profitable operation of his/her agency as a priority will ALWAYS serve the client best.
When I was last in the insurance business, I had 8,000+ clients and they were all well served BECAUSE I ran a profitable business. The benefits of a profitable, well run business as a priority will flow down to the client. The opposite is not always true.
When I sold my agencies, one of my buyers was a women with exactly your philosphy. She did not make it through her first year in an office that had easily earned a $75,000 profit in years past - nor were her clients well served when they needed someone there to service their policies after she closed the doors for the inability to pay the rent.
Often, new business people confuse advertising slogans (e.g.,the customer is always right!) with real business management wisdom. In fact, the customer is rarely right and you will learn that quickly if you run an insurance agency. I am speaking from decades of business experience - not from theory.
It takes real money to offer top customer service. That real money has to be earned via real commissions. To naively think that you can ignore commissions and the money is going to somehow be there to properly and professionally service the client with well-paid, trained and motivated people and all the rest of the requirements of a proper business is a pipe-dream.
What current economic downturn are you thinking of? The only one I'm aware of is not a result of businesses earning too much profit - but too little! Did you think the billions of dollars weve poured into GM, for example, is because they had been earning too much profit? How about the billions paid into A.I.G.? Too much profit or too little? How about the sub-prime mortgage mess, ground zero for the entire financial debacle? The sub-prime lenders ignored common sense business practices and made loans to individuals that had insufficient means to pay the loans back. They were putting the client first! And now their "satisfied customer" is in foreclosure.
For some reason, you've adopted an anti-profit stance. If you are going to be an agency owner, I strongly urge you to reassess that position. If you are simply going to be a commissioned agent where someone else has to worry about the profit and loss - you may be able to get away with it.
Profit is the backbone of business. It is to be celebrated, not shunned. Without it you have failure and misery and unfulfilled obligations.
I must agree with Ron Completely, yes, you must place the interest of the customer/client as a priority, however with out agency success you will never be able to provide the quality of customer service needed. This is a commission based business!, how do you think you will be able to pay the bills without focusing on profit!. Any person who goes into business with out focusing on profit, does not belong in business. Even if you mow lawns for a living, you must charge enough to sustain your expenses, equipment maintenance, and pay your employees and yourself! We are seeing a turn against the basic principals, of capitalism. If you ignore the basics, you will definitely fail.
True, the needs of the client should and must come first, however, remember the client does not necessarily know what is right for them. That is where you're expertise comes into play. Ultimately, proper counciling on your part usually means the client will pay more for their coverage, and be properly insured. If you constantly try to provide the cheapest coverage because the client wants that, then you better have a great Errors and Om missions policy with very high limits of liability coverage. Providing the cheapest coverage does not place you're client first. If you insure you're clients properly, then you will and should see the commissions necessary to sustain you're business. That will mean that the lowest commission paying policy will probably not meet you're clients needs.
Remember, profit does not go hand in hand with greed. Profit is good and greed is bad. Look at other successful agencies business plans and copy them or as in the franchise business model duplicate their success model.
Steve Papola