Starting any business like an independent insurance agency from scratch can be a difficult and frustrating experience but if you keep set out clear goals, do your homework, and make your smart calculated decisions on time, you might make it easier for yourself to start and build your independent business. Like any other venture, starting an independent insurance agency requires a lot of effort and you need to cross a lot of hurdles before you can establish a successful and profitable insurance agency of your own. The following 5 useful tips help you out through the process of starting an independent insurance agency of your own.
- Plan ahead
Do you have experience regarding insurance work? Having worked with an insurance agent in the past will be a plus but working for someone and running your own business are two entirely different things. There are a lot of things you have to consider and make choices about. For instance, you need to do research about the insurance agencies already working in your area and how you can do business differently in order to beat your competition? Independent insurance agencies produces a majority of property and casualty volume. In order to choose the field and type of insurance best suited for your abilities and area. Planning ahead will ensure that you make informed and educated decisions.
- Startup costs
Every business has its costs, similarly starting an independent insurance agency will require you to have enough funds to pay for premises, office supplies, staff, and insurance license fees. Even if you decide to work from a home-based office to save costs, you will need an amount in the ballpark of $5000 up to $20,000. You will need to have enough funds to cover the overhead for at least the first six months. It’s also wise to set apart a budget for marketing especially online on social media. Marketing and good customer service is the key to success for any new business.
- Getting a license
Getting a practicing license is one of the most important steps towards starting your own independent insurance agency. Almost all states require you to take course from 12 to 40 hours of general insurance lessons and at least 12 ethics course before you can attempt the licensing exam. The cost of the courses are around $200-$400 each. Some states require you to apply for different licenses for life, accident and health insurances so it is wise to look up your state’s requirements before taking the next step. You might need an agency license as well if you want to hire other agents to work for you.
- Buy a book of business
Buying a book of business from another agent is a very smart maneuver as it will help you start practicing right from the beginning. A business book refers to a list of clients and their assorted policies. By purchasing a book you are agreeing to work for those clients without having received any commission. The actual benefit of purchasing a book of business is that you might get referrals and you can also earn commission in case any of the existing clients in the book need a policy renewal.
- Insure your insurance business
The smartest way cover your back and protect yourself from any unforeseen losses and disaster, is to get insurance for your insurance business. It is also a legal prerequisite for any independent insurance agency to be insured so that both you and your client are protected.