F.A.Q
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Frequently asked questions
1.
How do I start an insurance company?
Step one, make sure you have some type of experience in the insurance industry before launching any type of insurance carrier, company, agency, brokerage, etc. Step two is to make sure you have an insurance license in the state that you are conducting business in. You must be licensed in order to conduct and sell insurance legally. Step three, secure appointments or contracts with insurance carriers (Nationwide, Liberty Mutual, AAA, Progressive,etc.) which allows your company to sell their services and will pay you a commission on each policy. Step four, get an errors and admissions policy, which is also called professional liability insurance. This basically means if your insurance company messes up a policy, that mistake is protected and covered. Step five is to get approval from the department of insurance, which pretty much approves your license and allows you to legally conduct insurance. You also may need to obtain a business entity license for your company in which you would then become a producer under that business. Step six is to stay patient and know that things will work out, you just have to stick with it.
2.
How much did you make in your first year as an insurance agency owner?
You will probably make very little in your first couple years if you plan on building something meaningful. There are ways to take home money in your first year, but I believe if you are trying to create a long term successful agency, you need to reinvest your money early, in the first 1-2 years. That requires paying yourself very little money. You must invest your money into lead generation, structural and management systems, automating/retaining customers, hiring employees, nurturing referral partnerships, etc. When I first launched my agency, I sold about $10,000-15,000 dollars in premium, not commission, in my first two months. That comes out to about $1,500 in commission in my first two months. It took me about three months to get a real carrier that was competitive and worked to get people to buy their services. At the end of my first year I sold about $250,000 in premium and now that I am approaching my third year, we are consistently $30,000-50,000 a month.
3.
What can I do to increase my business in size in the early years?
There are many things you can do to double, triple, quadruple, etc. your business. You should increase your activity levels, by calling other business owners to have a meaningful conversation that could end up giving you a deal that leads to thousands of dollars. You also should get uncomfortable and take risks by stepping out of your comfort zone and doing things that might be scary or risky. You need to delegate your work by finding out what your strength is and then hiring people who work well in the areas that you may not be as strong in. Try to project and forecast the revenue you might make by keeping track of your data and numbers.
4.
Do you recommend going to college for someone who wants to open up their own agency?
I have been thinking about this question for a long time, since I went to college. For me, I went to college but worked in the insurance industry in the summers. If you have some doubt about going all in on insurance, I would go to college. If you are super set on insurance and know 100% that insurance is what you want to do, I would go all in because your rewards could be big because you are using your time to make money and gain experience.
5.
What do you wish you knew before starting an insurance agency?
First, I wish I knew I wasn’t going to be paying myself for the first 18-24. Next, I wouldn’t always be selling insurance. Something I talk about a lot is relationships, so I spend a lot of time developing, maintaining, and establishing relationships and connections. Also, attention is key. Even though I may not directly see leads coming in from social media, getting my name out there is what matters. I am gaining attention about myself therefore people are remembering my name and thinking of me when it comes to insurance. I wish I knew to keep track of all the data I have including name, phone number, and email for all of my business partners, prospects, and more. Having all of that information is helpful when it comes to sending email blasts, looking up people, and keeping it all in one place. Big policies and small policies usually take the same amount of time and paperwork as each other. Knowing that now, it encourages me to go after some of the bigger accounts because it doesn’t require a bunch of extra time and energy. A big part of something I learned once I started is that customer satisfaction is extremely important because around 40% of our new business each month comes from current customers either purchasing more or referring their friend/family. Keeping customers happy continues to bring in more business and more money overall. Hire people to work for you and duplicate yourself. Find employees that you can delegate some of your tasks to and can help get your activity levels up. Along with customer satisfaction, you must keep your employees motivated and satisfied too. They are helping the business grow and they need to be able to speak their mind, get compensated correctly, learn, grow, and enjoy their job.
6.
Why do you charge such a small broker fee and do you use a loyalty program?
I actually did not always charge a broker fee, but now I charge it on some of the messier accounts we deal with at roughly around $200. Mainly, I want to earn my business, meaning I don’t want to overcharge people and then scare them off. I also want to do what is right for the customers, and I think $200 is fair for the time, work, and effort we put into it. If there is an account that takes a ton of servicing and work, we may even bump up the broker fee to around $500. My main goal is to do the right thing for my customers every single time, no matter what, so if that means helping them save money and making less money myself, so be it. I do not use a loyalty program for loan officers and successful leads. A lot of times referral partners will ask me to split a commission and I always tell them no. I will often send them a Starbucks gift card or a thank you card in the mail, but I unfortunately have an agency policy in which I will not split any commission. For big referral partners, I will usually take them out to a nice dinner and buy their meal and drinks or something along those lines.
7.
What is the best part about starting an insurance agency?
First off, I just want to start by saying that the best things in life are on the other sides of hard work. I know that sounds super cliche, but just think about some of the things in your life that you are most proud of and that you have done and that make you the happiest, those all came after loads of hard work. The best part about starting an insurance agency is that there is constant work that's being done in the agency. It is constant work that is just being stacked on top of one another. Whether it be hiring new team members, refining the internal processes, reinvesting into marketing strategies, or improving on the YouTube channel. There are just so many different aspects that are just stacking and stacking, which is the most fulfilling thing about it all.
8.
What are some of your best tips for navigating COVID as an insurance agent?
Across the board, prices are skyrocketing. Agencies are having to pay more to cover internal costs and therefore need to bring in more revenue, therefore increasing the potential to see insurance rates increase. It may also become harder to get appointments with insurance carriers because they are going to be stricter and tighter on their budget. My tips would be to advise your clients to make sure they have the proper coverage now. The goal should always be to protect your customers and their assets, so make sure you share potential risks with them before they arise. This can also help you secure your clientele to make sure your agency continues to grow.
9.
What are some pros and cons of running an independent insurance agency?
The number one pro of having your own independent insurance agency is that there is no major insurance carrier hanging over your head, no district managers coming in and checking on your progress. As an independent agency, you are able to work with several other carriers, and you do have to work to meet requirements with them, but it allows you a lot more freedom than it would in a captive agency. Another really great thing is that you are free to brand and market your agency however you want. I am able to make YouTube videos, post Facebook ads, make TikToks, and so much more without any restrictions because it is my own independent agency. The number one con that I noticed is that there is little to no support, compared to in a captive agency. You don’t have your backend franchise company to support you when stuff hits the fan. You are by yourself. There is no one to help you structure the phone systems, or the office, or the marketing, etc. Another con is that there is very little product training. There is no one to show you how to sell products or develop processes. As an independent agency owner, no one is handing you anything. No one is giving you a marketing budget or devoting resources to you. You are purely starting from scratch, especially with your own book of business.
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