Honest feedback, adding p&c to our practice.

[CFP83]

I welcome all feedback here as I am seriously considering starting a small P&C operation within our practice...

I've done some reading here on this particular subforum and a lot of folks talk about wanting to focus more on commercial lines moving forward as carriers are obviously marketing direct to consumer with home and auto, Geico and progressive just to name a few....

My main business processor on our team who handles all the paperwork, applications, and underwriting for our investment and insurance business spent nine years working for a captive Farmers agent before joining our team a couple years ago, and she still has her p&c license.
We have a nice base of clients within our practice, 150 of our clients pay an annual retainer for comprehensive financial planning along with the investments and life or long-term care insurance they may have....another 200 or so clients just have their investment portfolio with us and do not pay an annual retainer for financial planning.

I think we could get up to a modest 350k annualized premium after 12 months and exceed 750k+ after 24 months... at which point I could consider buying a practice or adding an additional full-time staff member to prospect for business. The buying of a small book could happen anytimebetween start up in the first year or two however as we are well capitalized and in a position the purchase the book if the right situation came along.
The above production numbers are no doubt small and we would need to join up with a cluster or aggregator group to get our carrier appts. Would not expect though that I would have much additional overhead to add p&c to our practise as my current staff has the extra bandwidth to handle this in the first two years assuming a book was not purchased and we started from scratch.

As I have stated in previous posts, a main ingredient in our process is bringing in specialist to help clients in many different areas such as part of Medicare supplements, mortgage, estate planning, and taxes..... Our clients love having this team approach and knowing we're looking at everything for them. Having the home and auto insurance specialist being with our firm, would obviously require additional disclosures however I can't see any clients having an issue with it.

What are your thoughts?

I could see our financial planning business benefiting from this move in the mid to long-term....as the P&C book grows it will provide additional opportunities for the wealth management business as well as life and long-term care business.

I look forward to hearing your feedback

 

[Markthebroker]

Having started captive (State Farm) then gone independent myself, I can tell you the former Farmers team member will have a lot to learn. Going from Farmers to independent is like a bicycle mechanic going and working on motorcycles. There are a lot more moving parts.

As far as getting with a cluster, this may be something @BADTROUT can comment on.

 

[CFP83]

Thanks MTB, I appreciate the feedback.

 

[BADTROUT]

Hello @CFP83 I will try to weigh in as unbiased as I can although I want to be upfront and tell you that along with my retail agency I also have an agency network that is active in Ohio. That said...

YOU SAID: The buying of a small book could happen anytimebetween start up in the first year or two however as we are well capitalized and in a position the purchase the book if the right situation came along.

I am sure you may have contemplated this but I will touch briefly regardless. Purchasing a small book doesnt come without its perils as well. Obviously you need to consider conversion rates when you are bringing current employees along for the ride will be higher than conversion rates where its simply a book transaction no matter how carefully you announce it to the client base. Additionally, just buying a book doesn't serve as a guaranty you will be appointed with a particular carrier, but in your case, I don't foresee any issues based on the limited info you have here.

YOU SAID: The above production numbers are no doubt small and we would need to join up with a cluster or aggregator group to get our carrier appts.

As a network owner and purveyor, I am still going to be the first one to tell you that you CAN do this without joining a network or cluster... HOWEVER what a network or aggregator (I call us a network) can do in many cases is offer you a higher commission or bonus than you would get on your own. A network can shave literal years off your wait for some carriers, and eliminate much of the stress associated with production requirements most major national carriers are going to impose on you. i.e. our 90% can be more profitable than your 100% because of the strength of the network in many cases.

YOU SAID: Would not expect though that I would have much additional overhead to add p&c to our practise as my current staff has the extra bandwidth to handle this in the first two years assuming a book was not purchased and we started from scratch.

Spot on. Your service work would be relative to your production in most cases.

YOU SAID: As I have stated in previous posts, a main ingredient in our process is bringing in specialist to help clients in many different areas such as part of Medicare supplements, mortgage, estate planning, and taxes..... Our clients love having this team approach and knowing we're looking at everything for them. Having the home and auto insurance specialist being with our firm, would obviously require additional disclosures however I can't see any clients having an issue with it.

What are your thoughts?

Having additional points of contact is always a GREAT way to keep a customer engaged in your business and less likely to shop around when they have many hooks. That said, you will be judged in many cases by your weakest link, so be careful diversifying too far from your bread and butter. You do however have someone with some experience it sounds like so that is a feather in your cap many would be crossovers don't have.

YOU SAID: I could see our financial planning business benefiting from this move in the mid to long-term....as the P&C book grows it will provide additional opportunities for the wealth management business as well as life and long-term care business.

I look forward to hearing your feedback

You have a good solid foundation and someone with experience so it seems like this is an opportunity to consider for sure. I champion the scratch agency approach because thats what I did and for me it's good for the soul to see someone build something from nothing. When starting from scratch in today's age it makes sense to consider joining a network. With our network or any network there are some things to consider on your end of things. I wish you the best, and whenever you get to the point where you are interested in more info I would be happy to show you our network (in my signature block FYI).

Here is that list of questions I recommend you ask any prospective agency cluster or network.


1. Do you have a good carrier mix across the lines of business I want to use in my agency?

2. Are those carriers competitive in my region?

3. Do you have any production requirements?

4. Do you provide an agency management system?

5. Do you provide a comparative rater(s)?

6. Do you have a non-compete or non-solicitation if I decide your network isn't for me? If so... why?

7. Do you have any exit fees?

8. Can I sell my agency at some point?

9. If I sell my agency, do you take a cut?

10. HOW do I access the carriers... do I submit everything to you, or do I get DIRECT access to the carrier?

11. How long is my contract for, and do I get ownership right away, or over time?

12. What are the startup fees and are you willing to work with me if I need to make payments?

13. What is the commission rate?

14. What share do I get of the contingency bonuses (If any)?

15. What is the criteria for participation the contingency bonuses (if applicable)?

16. Do you offer guidance and training during the startup phase of my agency and a spirit of mentorship throughout the relationship?

17. Are you open to me contacting some of your member agencies before I sign the contract?

18. May I have an attorney, or third-party consultant review my contract with me?

19. How much industry experience does your network leadership have?

20. Do you offer customer service support for my customers, or is that support up to me? If applicable how much commission do I have to give up in exchange for this support?

21. I think the MOST important thing someone can do other than reading the contracts of many networks is to speak to the owner/CEO/president of each network to get a feel for the culture. Let's face it, some people you like the minute you meet them, and then there are others well, not so much... If you find they don’t have the time to talk to you... message me your contact info and I will make time for you.

One thing to note... This is just as much an interview of you to be a good fit for a prospective agency network. No network wants to be the quick unthought-through decision and asking these questions will strengthen the relationship with your chosen group. There are subtle nuances each network option will bring to the table and each will stress some areas over others. At the end of these questions though as you are reviewing each of them carefully, I hope you find your answer far more clear than when you started.

If you find this helpful, do me a favor and remember where you got it and drop me a line to tell me what you ended up deciding and how you are doing! Good luck on your adventure!


Trout Kirch
President/CEO
Horizon Agency Systems
855-999-2774
www.agency.builders

 

[marindependent]

1. Do you have a good carrier mix across the lines of business I want to use in my agency?

2. Are those carriers competitive in my region?

3. Do you have any production requirements?

4. Do you provide an agency management system?

5. Do you provide a comparative rater(s)?

6. Do you have a non-compete or non-solicitation if I decide your network isn't for me? If so... why?

7. Do you have any exit fees?

8. Can I sell my agency at some point?

9. If I sell my agency, do you take a cut?

10. HOW do I access the carriers... do I submit everything to you, or do I get DIRECT access to the carrier?

11. How long is my contract for, and do I get ownership right away, or over time?

12. What are the startup fees and are you willing to work with me if I need to make payments?

13. What is the commission rate?

14. What share do I get of the contingency bonuses (If any)?

15. What is the criteria for participation the contingency bonuses (if applicable)?

16. Do you offer guidance and training during the startup phase of my agency and a spirit of mentorship throughout the relationship?

17. Are you open to me contacting some of your member agencies before I sign the contract?

18. May I have an attorney, or third-party consultant review my contract with me?

19. How much industry experience does your network leadership have?

20. Do you offer customer service support for my customers, or is that support up to me? If applicable how much commission do I have to give up in exchange for this support?

21. I think the MOST important thing someone can do other than reading the contracts of many networks is to speak to the owner/CEO/president of each network to get a feel for the culture. Let's face it, some people you like the minute you meet them, and then there are others well, not so much... If you find they don’t have the time to talk to you... message me your contact info and I will make time for you.

Great Set of Questions for Any Cluster, Aggregator, MGA, etc