What’s involved in starting a P & C Insurance business?
Can someone explain the process please? Getting a State License is the first and easy part (I already have my FL Health, Life and V. Annuity License.), but what are the steps after that? I am looking to become a broker (not a Captive agent). I already have a business storefront.
How do I get Insurance carriers such as Allstate, Nationwide, Progressive, Mercury and other hundreds… to give me their quoting and service support? What’s the monitory commitment? What are their requirements?
What are the advantages/disadvantages of buying a franchise rather than going at it alone?
Any help is appreciated.
If you need to ask what’s necessary to start an insurance brokerage, then you are not ready to start an insurance brokerage. I recommend that you work at a brokerage for a couple of years to gain some experience at how one operates a brokerage from both the production side and the management side. BTW no insurer is going to sign a contract with someone who can’t spell monetary (unless you asking what the insurer’s commitment is to administer warnings?).
Well, Allstate and Nationwide are NOT going to give you a contract, unless you agree to ONLY represent them.
There are basically three different kinds of companies, from the main street agent’s point of view:
Direct writers – these companies – including USAA, Amica, Geico – have “employee agents” in their office, to write business.
Captive agent companies – Nationwide, Allstate, Liberty Mutual, State Farm – these have “independent contractor” agents that have their own agency, but ONLY can sell insurance for that one company
Independent agent companies – Travelers, Progressive, Mercury, Zurich, etc – these have agents they appoint with NON exclusive contracts.
By far, the hardest part of starting a P&C agency, is getting the contract – IF you want to be an independent. It’s pretty easy, if you don’t mind being a captive, but then the business you drum up is owned by the company, if you ever decide to switch contracts or businesses. Whole agencies are bought and sold, JUST FOR those contracts.
As a new P&C agent, with no experience and no book of business to roll over, you’re going to be very, very hard pressed to find ANYONE to give you a contract. The easiest are Progressive and Foremost, but might not be available in every state.
Many agents find it’s easier to start, by either buying an agency, or buying into ownership of an agency, or working as a producer for an agency. I’d recommend this, to find out if you even LIKE the business, and can sell enough policies to support yourself.
OH, and WHEN YOU START your brokerage, you don’t normally get quoting or support service from the carrier – you get the rates, and a check. YOU have to provide the support yourself, or hire an employee to do that. YOU have to buy your agency management system, which can run over $25,000 for ONE STATION, depending on which one you choose.