Starting a New Agency?

[Matt B]

Wow, I don't know where to start. Worked in my families hybrid/captive agency for 10 yrs. Took one location and opened 3 more. One location being Hispanic.
I've gone through Mentee programs, been offered books of biz, bought books of biz, hired and fired, opened scratch agencies, and worked back of the house as well. I have P&C, L&H, Series 6 and 63 licenses, and write quite a bit of commercial.
I've also worked on the independent side strictly on commercial biz.
BTW, I'm in PA and my situation has changed drastically..and not for the better. I will save that story for another day.
The long and short is you can do this. Any other questions please let me know.

 

[Stevis50]

Fearsback - that's a great idea and thanks for the offer. I am in Florida currently but I won't be making a move on this until I relocate to MD because that's where I want to settle and obviously, it wouldn't do me much good to start here, stop to relocate, and start over again. But thank you for the generous offer for help.

Matt - Thanks for the inspiration as well, it's nice to hear from someone else that has done it themselves. I really like the support from everyone in the forum vs most other internet forums that just want to beat everyone down. Hope your situation reverses itself soon.

 

[fmia]

Good for you Matt...

My daughter and I just opened our own agency in Florida and we live here & yes very scared as my husband is the bread winner in my home and my daughter WAS in her home. We had a very bad taste in our mouths working with other agents. Verbally abusive and always stealing from our pay.

The only word of advice I can give is to always be honest with your clients nomatter what and ALWAYS follow through. You will be successful. We are nervous but we are both really happy doing this. Don't give up your dream, someone will always try to bring you down but you will have to stay positive...

 

[b61mack]

When someone says, you can't do that! It just means THEY could not do that!. But in this case he is just trying to wake you up, and let you know it is not an easy road!

 

[Stevis50]

fmia - congrats on your move, how is it going for you so far? I agree, you have to be honest, and that's what I tell people every day in my current role. I think that the fact that I've never had to work for commission so far has given me a good perspective as far as that. I've been able to see what some of the people with less than honest agents have done, and makes me want to be one of the better class.

b61mack - I agree, and I appreciate that. It's definitely not easy, and I'm not one of the people that think I'll quit my job and start doing it tomorrow and make a fortune by the end of the year. I greatly appreciate all the points of views here on the boards, positive or negative, as long as they're presented constructively. Still, I'd love to eventually be one of those guys that I used to visit as a Mercury underwriter that says I've been doing this for 30-something years and started for nothing and now look at me!

 

[Matt B]

Nobody has made more mistakes then me and in this biz they can be very costly. Make sure you recognize your weaknesses and work on them all the time.
I used to want everything today. Work was always most important. I left no time for anything else. Don't do this..... Aside from the business smarts this biz requires patience, organization, selflessness, and a balance in life.
To all of you working in existing agencies or starting your own -Best of Luck.

 

[Stevis50]

Yet more great advice Matt. I have that urge to always want everything right way, but I'm lucky enough to have plenty of grounded people around me that when I get in that mode, they snap me back to reality and make me remember that it's not how things work. And I've had the balance issue too. It definitely can cause problems long term.

 

[ins cloud]

I enjoyed this thread, I too am close to going Indy. I have partnered with a financial advisor who will be purchasing an office space, paying for E&O insurance ad has a current client management system in place.
I am concerned about being able to write through competitive companies on auto an home personal lines since that is my main focus now. It's a risk but I know I can make it happen. Any advice is always appreciated

 

[PhilL]

Maybe this will be of help to some of you folks who are starting or planning to start new P&C operations.

They have a lot of names within the P&C world: Agency Networks, Agency Groups, Clusters, Premium Aggregators, Agency Franchises, etc. They serve a very important role in the P&C industry, in particular. One or more of them could provide a solid base for your agency to succeed. As many thread posters have indicated in these Forums, these organizations can be a very viable way for an agency to acquire markets and services that might otherwise be difficult or not likely to obtain in this marketplace. However, when evaluating any of them, you need to ask - at a minimum - the following questions as part of your due-diligence process.

I will refer to all of these as ‘Networks’ for the purpose of this
piece.

1. Who would own the business that I produce as a member of your Network?

Obviously this question is critical but I have known agents who have joined Networks without asking for clarification about it and have paid the price, as a result.

2. What would be my commission percentage?

Determine what your commission percentages would be from day-one after joining? Also, ask if you have the ability to earn enhanced commissions in the future and under what specific circumstances. Also, find out if carrier bonuses are paid directly to your agency, for accomplishing specified production goals during the course of the year.

3. How would I access markets?

Many Networks are set up to write business from their members through a central placement facility or a third-party. Determine if it is important for you to be able to write business directly with carriers, by using their online systems and contacting their underwriters. This is not always critical to every agency, depending on each particular situation and circumstances but it is important to be clear as to how this will work for you.

4. Whose name would appear on the declaration page?

Centrally placed business usually bears the name of the Network on the policy declaration page. Under a direct access model, your agency name would appear on the declaration page. This is not a key concern to all agencies when evaluating Networks but for many it is very important.

5. Is there an initiation fee? If so how much and what other fees are involved to a member as they progress with you?

Obviously, be very clear about this, especially regarding future fees of any kind.

6. Will the Network take an equity position in my agency?

Some do so with business written through their Networks and also in business not written through their Networks. This is a critical consideration for an agency. Ask the Network Representatives for the names of some of their members in your State and Region. Call them or set up a breakfast or lunch meeting with them. The prospective Network should be happy to provide you with names, websites and phone numbers. Ask the current members how the program you are considering is working for them, especially as relates to the Network taking an equity position, if they do so.

7. Can I earn profit-sharing through the network?

Some Networks retain all profit-sharing while others share it with their agent partners. Ask for written examples of how their program addresses this feature.

8. What is the minimum production level for my agency to be eligible to participate in your profit-sharing program?

This should be provided in written form.

9. What else can the Network provide for my agency besides market access?

How about free consulting to help me maximize profits? Producer training, financing, marketing and sales support, agency perpetuation planning assistance, etc. What else and how do you deliver it? Are there additional costs?

10.What would happen if I sold my agency at some point after joining your Network?

Be clear on what would occur. This is obviously very important.
Develop a couple of scenarios that you might conceive of for the future of your Agency and get an understandable explanation of what would happen in the event of a sale under each circumstance.


**Definitely ask for a copy of the contract you would be asked to sign. Take some quiet time to read it! Make notes of your questions and ask the prospective Network representatives to address them. Then have it reviewed by an attorney with insurance contracts expertise and/or one of your State or local professional insurance organizations, like the IIA or PIA. This investment of your time and money can prove well worthwhile.


In conclusion, while this is certainly not all-encompassing in terms of the questions you should ask, it incorporates some of the key questions you need to be asking. Ask a lot of questions! Make sure you get answers that make complete sense to you. You may want to consider writing out your questions and submitting them to the prospective Network partners and ask them for written responses. Talk to other agents. Pose your questions on this Forum!

Obviously you are making a very important decision that could affect the future of your agency and for you personally, for a long time. You need to be certain that you do the most thorough job possible in your evaluation process. Take your time. You need to ‘think it through’ and it needs to make sense for you and your agency situation.

Hopefully, I have given you some useful thoughts here.

 

[pcbinsurance]

Thanks Phil.
That's definitely the best post of the day!