Cost to Start Your Independent Agency

Cost to Start Your Independent Agency

July 13, 2020
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Becoming an independent insurance agent is a great business choice. There are a lot of perks of opening up your own business - flexibility, unlimited earning power, and no boss over seeing your day-to-day operations. There are start up costs that all new agents should account for when starting as an independent insurance agent.

What Does an Independent Insurance Agent Do?

Independent agents sell insurance products, such as life, heath, auto, home and business insurance. These products are offered by insurance companies, but as an independent agency, you are able to offer your clients a wide range of well-rated carriers that fit their needs and budget.

To thrive as an independent agent, independent agencies such as Secure American Insurance, work with new agents to set-up their own agency with Secure American Insurance, train them and provide them access to dozens of insurance carrier. Independent agents are typically paid on a commission only basis.

Getting Licensed

To sell insurance in each state you must be licensed.

The studying doesn't stop once you finish your exams - there are products and carriers to learn as well. You will also need to continue to keep learning about updates, regulations and stay on top of product changes. If you decide to go the independent route and work with a independent agency such as Secure American - there may be on-boarding opportunities as well continued learning opportunities provided by the company.

Start-Up Costs

If you start with an independent company they may have you set-up an LLC and EIN number. These are pretty quick and depending on the state, cost under $100.

During training with Secure American, new agents will receive help on the will help to set up their LLCs if needed. You may also be asked to sign a contract as an independent agent - be sure to read the details and make sure you stay in compliance.

Many companies now require on-boarding fees as well. These fees cover the time for the managing team to spend hours teaching you about their carriers, technology and marketing. Many have started to ask new trainees to pay these fees up front, to guarantee their time and investment in the company.

Secure American, for example, has a week long training with 4 - 8 hours a day - depending on the candidates needs. We focus on operations systems, carrier quoting, carrier appetite, marketing training, branch agency setups and more.

Some companies also require a monthly fee to use their Agency Management System and sometimes will group it with E&O insurance to save their agents money.

Agency Management System

With many types of business there are specific types of insurance, programs and specialized tools that are required of the job. For Realtors, many need access to the MLS (sometimes multiple) and this is a cost they are expected to cover. For insurance, there is Agent Management System software.

Agency Management Systems allow agents to keep track of their clients, sales pipelines, and prospective clients. AMS systems are a crucial part of agencies being able to maintain efficiency.

Insurance

It may sound a little odd, but to sell insurance you have to have insurance. The least you will need is a Business Owner Policy and Errors and Omissions insurance.

Many companies may group their agents together and offer a group plan that provides the necessary coverage. This is a great option for independent agents as it ensures they are covered and provides more competitive pricing.

If you grow and continue to build your business, you may need additional policies so be sure to review state guidelines.

Buying a Book of Business

The quickest way to hit the ground running as a new agent is to buy a book of business from another agent. The book in this sense, refers to a client list and their associated policies. When you purchase a book, the selling agent transfers the accounts to you.

You gain a book of clients - renewals and any new commissions from the list. The cost per policy varies and can depend on the market, commission and renewal rate.

Generally speaking, it can be a risk to purchase any book of business and many companies will help you build your own. Secure American for instance helps agents start their agencies from policy number 1. Secure American provides the resources and on-going webinars to help you build your own book of business.

There's so much more involved with building your insurance business! For the most part, this article hits on some of the expenses you may face in the beginning as well as recurring monthly cost - but if you are interested in taking the leap to build a recession-proof business you can manage, get in contact with us at Secure American Insurance , we are here Monday through Friday, from 9:00 AM to 5:00 PM to assist you throughout the entire process.