Starting Scratch Independent Agency

[moonlightandmargaritas]

I went into this blindly not realizing the cost of an agency management system, lease, E&O, and other cost that have drained my savings quickly.

Poor to no planning always comes back to bite you in the behind.

 

[tninslady]

I have a 24 page business plan and had a large nest..... Maybe "blindly" wasn't the correct verbiage. I knew what the cost would be; however, I didn't realize I would need the agency management system, retail spot, and marketing going before contracts were established. So paying out months of biz expense before writing any business hurt.

Nothing is biting me in the butt.... Just spent more than the original plan bc of big name company constraints. No harm, no foul .... Just adjusting

 

[AZDave]

Makes a huge difference who you are captive with. Much easier if your captive contract allows you to make 'an announcement' to your current customers, advising them that: a: you are no longer able to service their policies b: give them the 1-800 number for service c: your announcement is sent on your new agency letterhead, and you thank them for their past business.

If they seek you out, can you write them?

If not, and it is a no contact regardless, then more difficult and not a real book roll.

Aggregators do not like to see agency's financed.

Good Luck!

Dave

 

[bliss171]

I anticipate that it will be a pure scratch and that I will not be able to solicit anyone in my book of business where I am currently. Does anyone have any stories about how they got financing and/or the cluster/alliance/aggregator that they went with?

 

[nyc2phi]

Hi all,

I am a 6 or 7 year lurker, but have never posted before today. I would like to solicit advice from the wealth of knowledge that I know is active on this site. I have been with a captive company for nearly 9 years. I started with absolutely no knowledge of the insurance business when I took a nearly scratch book with my current company. I have since been highly successful with them (by their standards). In the time I have been with my company I have made it a point to become an expert on my product lines, and with the industry as a whole. I had a high school education when I started, and while running my agency I earned my Undergrad, MBA, and 4 insurance designations, including the CLU and CPCU. My long term goal has always been to go independent. This desire has been stronger than ever in my current market where I am 30-40% higher than 80% of the market. I am very good at creating value and closing sales. I do not need help or advice in this area. When you are constantly closing sales where you are higher on premium, you become very good at adding value and increasing coverages to create that value. However, I am so very tired of having to work 3x as hard to close 40% of the sales that many independents enjoy. Additionally, I want ownership equity in my agency, and be able to honestly say that I am representing the best interests of the company, including price, value and respectable carriers.

SO- that brings me to my current situation. If you were in my position, how would you go about going independent? I have taken a hard look at SIAA, as I think this may give me the best shot at growing quickly, as I am instantly big. I know that I will have a nearly impossible chance of getting preferred carriers as a scratch, despite my credentials and history of sales success. The two biggest hurdles that I see are contracts and financing. I have 6 months of income saved up, but I know that is not enough. I anticipate rapid growth, and am projecting to be able to start taking a paycheck within 18 months. I have an area in mind to start, a business plan, and all of my projections based on what I have seen other independents do, and based on my own work ethic and my past track record. Does anyone know of any company that will lend money to a scratch agency? I know I cannot get an SBA loan because I do not have the volume in the agency. My dad has said that he will carry me as well, but I would prefer to go the loan route if possible to not be a burden to him. If anyone has any good advice, or has been in my position in the past, I would really appreciate any advice you can give me, as I feel that I am capped, treading water, and just throwing my career away by remaining where I am. Thank you in advance for your help!

Have you looked into Auto Owners? I believe they are in your state. They are similar to a local carrier that I have called Erie. If you can get them you can also get progressive and that is all you'll need for a good amount of time

 

[bliss171]

Auto Owners is here in Missouri and they are very competitive. However, I doubt they would give me a direct contract as a scratch. I don't know if there is much choice other than going through a cluster. I have seen SIAA, Iroquois, and a few others so far. If anyone else has any experience with these outfits, I would love to hear your story.

 

[Billy30045]

I am in the process of opening my agency in Georgia and it has been a strain on my patience. I purchased an office suite and it has taken 2 months just to get the permit to do the buildout. Then there is the phone system, the computer systems and the cost of furniture, etc. I will have spent well over 200K by the time I open the doors.

I did a lot of research and signed with Assured Alliance, you open your door with competitive products and a lot of support.

 

[nyc2phi]

I am in the process of opening my agency in Georgia and it has been a strain on my patience. I purchased an office suite and it has taken 2 months just to get the permit to do the buildout. Then there is the phone system, the computer systems and the cost of furniture, etc. I will have spent well over 200K by the time I open the doors.

I did a lot of research and signed with Assured Alliance, you open your door with competitive products and a lot of support.

$200k? I started with 10k and I'm fine. Why so much? Are you starting with a full blown staff or something?

 

[Billy30045]

yes I am opening with a CSR and 2 producers

 

[scooter33]

I am in the process of opening my agency in Georgia and it has been a strain on my patience. I purchased an office suite and it has taken 2 months just to get the permit to do the buildout. Then there is the phone system, the computer systems and the cost of furniture, etc. I will have spent well over 200K by the time I open the doors. I did a lot of research and signed with Assured Alliance, you open your door with competitive products and a lot of support.

200k before you even sell one policy? That's nuts! If you are starting scratch, it will take you at least 36-48 months before you gross 200k.