October 21

The Complete Guide to Starting an Independent Insurance Agency

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According to a recent report, 24 million Americans want to be self-employed. Do you want to fire your boss, branch out on your own, and start an independent insurance agency?

Working for one's self comes with numerous perks, including flexibility, not having to report to anyone, and reduced stress. 

Or maybe you're attracted to the earning potential that lies in starting your own independent insurance agency. Not only is there a lot of freedom in having no boss—but being your own boss can also open up higher earning opportunities.

This is especially true when it comes to selling insurance.

Currently, Ziprecruiter estimates that independent insurance agents earn an average of $91,323 per year. Top-performing agents can earn up to $210,000 annually. 

But how does one start your own insurance agency? What are the steps involved and is it possible for anyone to do?

Carry on reading to find out just how to go about successfully opening up your own independent insurance agency. 

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Get Licensed and Certified

If you aren't yet licensed to sell insurance, this is the first step you will need to take. 

Obtaining a license to sell insurance is relatively simple. You don't need a college degree or any other prerequisites. However, you will probably need to carry out pre-licensing training. 

The content and format will depend on the state you reside in. However, most programs will cover all of the basics, such as health care laws, areas of compliance, deductibles, co-insurance, etc.

To find out what is required for your particular state's insurance licensing exam, the best thing to do is visit your state's insurance department. To find your state's insurance department, you can visit this directory page from the NAIC.

Besides obtaining your insurance license, you might also need to obtain certain other certifications. For instance, if you want to start selling Medicare insurance, you must complete annual training and certification with the AHIP. 

Besides this, you might also need to complete carrier-specific training and certifications in order to sell certain products.

Invest in Training

If you want to be your own boss and open an independent insurance agency, you should also invest in additional training besides any mandatory training and certification.

Unless you are versed in sales and marketing, it's essential you hone your skills in these areas. Being a good salesperson is a vital component of selling insurance.

If you're planning to open your own insurance agency, then you'll also need to have a fair amount of marketing knowledge. The more you know about marketing, the better you'll be able to promote your business.

Even if you have a background in both of these areas, you should still look into taking additional training that covers insurance-specific sales and marketing techniques.

Create a Business Plan

The next step to launching a successful independent insurance agency is creating a business plan. Now you might be thinking, 'I don't need a business plan, I know what I'm gonna do, I'm gonna sell insurance!"

That might be so, but you still need to dial in areas like:

  • Your target market
  • Your competition
  • Your business goals
  • Your competitive advantage
  • Any financing needs

Having a business plan in place, even if it is a simple one, will help you allocate resources, gain a competitive edge, reach the right market, and more.

Choose a Legal Structure

Another important step you'll need to take when opening an independent insurance agency is selecting the right legal structure for your business. 

Here are the primary options:

  • Sole proprietorship
  • Partnership
  • Corporation
  • S corporation
  • Limited liability company (LLC)


 

Pro Tip: If you choose to operate as a sole proprietor, you can file the business taxes under your own name. If you register as a partnership or corporation, you will need to obtain and use a federal employer identification number (FEIN) when filing your taxes.

If you register as a single-member LLC, you can also file the taxes under your social security number. Multi-member LLCs will require an EIN however.

Decide on a Name and Register It

Besides choosing a legal structure, you must also decide on a name for your independent insurance agency and register it. 

Try to ensure that your name is:

  • Easily searchable
  • Easy to spell and say
  • Meets any state requirements
  • Conveys value


 

Pro Tip: Although it can be tempting to incorporate your location into the name of your insurance agency, this can restrict you in the future. For instance, if you expand to another state or town, you definitely don't want your hometown in your name.

Once you have decided on a name you should register it with your state's government.

Obtain the Right License and Permits

To legally open an insurance agency you will also need a general business license. To obtain one, you should visit your local municipality's website to find out how to apply. 

Besides this, you'll also need to contact your state's insurance commissioner's office and register as a "resident business entity."

This will enable you to pay state and local taxes. You will also likely get a checklist to complete to ensure you are aware of and in compliance with state requirements.

Take Out Insurance

Another important administrative task to carry out is taking out the necessary coverage for your independent insurance agency.

Here are the main types of coverage you will need:

  • General liability insurance
  • E&O Insurance
  • Workers' compensation insurance
  • Cyber liability insurance

If you lease physical office space or buy a vehicle for your agency then you should also look into commercial property insurance and commercial auto insurance. 

Take note, that some FMOs (more on these below) provide E&O insurance or discounts along with their memberships.

Get Clear on Branding

To make your independent insurance agency stand out, it's essential that you invest some time and money into your branding.

Start by considering your target market and competition. Ask yourself, how can you differentiate yourself with your branding and appeal to your target market?

Keep in mind that branding isn't just coming up with a logo.

You should also focus on creating a strong:

  • Tagline
  • Mission Statement
  • Brand Story
  • Brand Voice

Besides these elements, you will also need come settle on a color scheme, fonts, and imagery.

Find a Good FMO

Before you can start selling insurance products you will need to get contracted with carriers. The easiest way to do this is via a good FMO (field marketing organization) or IMO (insurance marketing organization).

Many insurance carriers do not work directly with independent insurance agencies or agents. Instead, they partner with FMOs and IMOs who act as intermediaries. 

Insurance carriers that offer direct contracts, typically require agencies to meet minimum sales numbers and production requirements.

FMOs and IMOs not only make it possible for small agents and agencies to contract, but they also streamline the process and offer additional support and resources. Such as E&O insurance, training, access to free tools, etc. 

Look for an FMO or IMO that focuses on supporting and nurturing its agents through resources, coaching, training, and discounts.

Here at TR King, we are committed to helping agents reach their goals and creating thriving insurance careers and agencies. 

This is why we have a number of agent discounts available on the top tools, courses, and services you need to start and grow your insurance agency.

Hire the Right People

Although you can launch an independent insurance agency alone if you have the capital you can also choose to hire some staff members from the get-go. This will allow you to delegate tasks, and grow your insurance agency at a more rapid pace. 

If you are a good salesperson, then you should be out there selling, not getting bogged down in admin. Therefore, if you can, try to hire a couple of people to handle administrative and marketing tasks for you.

You can also choose to hire additional agents. You can offer them a small salary retainer, or you can have them work purely on a commission basis. Learn more about that here.

Develop and Implement a Marketing Plan

Along with creating a business plan, you should also develop and implement a marketing plan. Having a marketing plan in place will provide you with a road map for your marketing efforts and campaigns. 

It will also help you when measuring results.

Start by:

  • Evaluating your target marketing and where they can be reached
  • Determining a budget
  • Setting goals
  • Creating campaign structures

From here you can start implementing your marketing strategies. Read about some SEO strategies here.

Invest in Leads

Although it's important you invest in organic and paid marketing strategies, buying leads is also a great way to kickstart your insurance sales. 

You can use leads to boost lead numbers in the early days of your insurance agency. As time goes by you can also buy leads to supplement your other lead generation strategies.

Buying a Book of Business


 

Pro Tip: Another way you can get sales numbers off the ground is by buying a book of business from another agent or insurance agency. If there is an agency that is closing in your area or an agent who is retiring, they might be interested in selling their book of business.

If you purchase it from them, you can then take over their existing client base. Although you won't receive current commissions from it, you may have the opportunity to sell to this client base and snag any repeat sales.

Looking to Open Your Own Independent Insurance Agency? Choose an FMO That Truly Supports You

As you can see, opening your own independent insurance agency isn't all that complicated. If you follow the steps above, you can be in business in no time at all.

Before you hit go on your insurance agency, make sure you sign up with an FMO or IMO that will help you achieve your goals. 

TR King is an industry-leading field marketing organization. We provide high-level contracts with top providers. We also supply our agents with access to impactful training, resources, discounts, free tools, and more. 

Use our online process to sign up in as little as 5-8 minutes and get contracted today.

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Matthew King


Matthew King is a co-owner of TR King Insurance Marketing. When he's not creating processes, content, developing training, and implementing digital marketing strategies, he likes to immerse in gaming with his wife and friends.

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