Starting an Independent Insurance Agency

Michael Miller | October 12, 2021


Key Success Factors to Thriving as an Independent Insurance Agent

Starting your own independent insurance agency can feel both challenging and overwhelming — and it’s a leading reason many agents start in the captive world or as a producer in someone else’s agency. Many feel that the challenges of simply knowing how to start any business are daunting and simply don’t know where to begin.

Why Should I Become an Independent Agent?

The captive insurance world is attractive to many because it offers insurance agents a set of instructions and the benefit of a great support system. However, the downside to the captive model quickly becomes the limited markets, lack of options for placing business, and inability to satisfy the needs of one's customers. As an independent agent, you’ll not only be your own boss; you’ll have access to a multitude of different coverage options for your clients and run a much more profitable agency.

How Do I Start My Own Independent Insurance Agency?

The good news is, independent agents are NOT alone, and there are agency networks you can partner with to help navigate the struggles of starting your own agency! To be successful, agents must be experts in all of the products they offer, have plans to market their agencies, and have systems in place to generate leads. Let’s take a look at the challenges of starting an independent agency and how you can overcome them with planning and resources:

Appointments and Volume Requirements

One of the primary barriers to agents starting an independent agency is access to carrier appointments and markets. Many carriers — especially the top-rated and most competitive ones — are reluctant to give new agents appointments. The very best thing a new agent can do is work in another agency — captive or independent — for a few years to learn the business and build relationships with carrier partners. 

Even once an agent gains appointments, it can be exceptionally difficult to balance satisfying the volume requirements expected of your carrier partners. Agency networks, clusters groups, and aggregator models can help with his by negotiating lower requirements on your behalf. While you’ll usually be expected to share a portion of the commissions you earn, partnering with a group like this can make it much easier for you to balance your book of business and grow your agency faster. 

Marketing Assistance for Independent Agencies

Before you even open your doors to clients, you should identify a target market and put together a comprehensive marketing plan for how you will reach this market. This plan should identify your goals for growth for at least the first two years and provide tangible strategies for hitting those goals. To begin, identify at least ten customers from your immediate circle who will be customers. 

Your marketing plan should also include what sets your agency apart from local competition and how you’ll promote these differentiators to your clients and prospects. A large portion of your initial client base — and even ongoing client base — will come from referral business. Always ask your current clients for referrals and Google reviews. Take the time and money to set up an easy-to-navigate website and business social media pages. Most clients will now ask for referrals in online social media groups and through a simple web search. There are all sorts of ways to market your agency; you need to pick a few ideas that you’ll follow through with — then get these plans set in motion before you open your doors. 

Expert-level Insurance Product Knowledge

While one of the main benefits of being an independent agent is finding lower rates for your clients by comparing quotes, you should always sell on the value of the policies you quote — not the cost. You must have a solid understanding of every single product you offer from each carrier. It’s important that you act as a resource and risk expert for your clients because they rely on you to identify and understand the products that suit their unique circumstances.

This is why it often pays to start writing just a few policies — P&C, for example. Once you have mastered understanding and selling a few policies, you should extend your offerings to umbrella policies, recreational policies, and even the commercial and health/life markets. Take the time to learn about each product in your new market.

Support for Starting an Independent Insurance Agency

The points above are some of the main challenges independent agents face; however, many agents still struggle with knowing some simpler aspects of running a business — like permits or basic paperwork to complete. Agency networks like Smart Choice provide dedicated support and mentorship in your state to help you navigate these difficulties. While many factors contribute to starting a successful agency, having an expert partner by your side is one way to ensure your success and not have to go it alone.

Contact Smart Choice® today!

About the Author

Michael Miller is a Smart Choice State Director with over 37 years in the insurance industry. He leads field operations for Smart Choice in Minnesota, Wisconsin, and Iowa. His experience and support has proven to be invaluable to new and established independent agents looking to grow their books of business.

This blog post was originally written on November 30, 2016.