Insurance Agent Forum

[dr00t]

Hi Everyone. I have been reading through this forum since joining today and can only hope to have my questions finally answered after weeks of researching to no avail.

First, let me start off by telling you all about myself really fast...

I am not an insurance agent. However, my dad is. He's been in the business for several years and works for an independent agency as a "commercial lines producer". Recently, I raised the question of starting his own independent agency. His responses to WHY he is reluctant to starting his own independent agency are what led me to this forum seeking answers.

1. He believes that establishing contracts with carriers is very expensive and time consuming. I believe there MUST be an easy way to do this... Can some of you please provide some insight into this process. With exception to application fees, are there really some major costs involved with gaining carrier contracts or is my dad just simply wrong?

2. He also believes that if he applies with the carriers during the start-up process of his agency, some word will leak back to his current employer and all hell will break loose. Is there some protocols in place to prevent this from happening or should he end employment BEFORE applying for carrier contracts? What do you all recommend?

3. I am aware that he signed something with his current employer regarding non-competes with his book of business. If he honors that, but a client insists on following my dad to his new business... is there anything the employer can do or is he safe? My father is a very trustworthy person and would never maliciously harm his former employer by intentionally violating any contract he has with them. I just want to know what some of your thoughts on this are and how he should handle it.

I have a bunch more questions, but I think these three are good to start with. Thank you in advance to anyone willing to help answer these!

[moonlightandmargaritas]

Your Dad is right.

[dr00t]

Well, I guess I don't quite understand what he is right about?

I mean, how can so many agents start or create their own independent agencies if the barrier is supposedly so high? I think the barrier has lowered in the past 10 years, based on my observations. Maybe I am wrong.

I still need some additional insight into the three questions I have posted above.

[moonlightandmargaritas]

Originally Posted by dr00t

Well, I guess I don't quite understand what he is right about?

I mean, how can so many agents start or create their own independent agencies if the barrier is supposedly so high? I think the barrier has lowered in the past 10 years, based on my observations. Maybe I am wrong.

I still need some additional insight into the three questions I have posted above.

You are wasting time.

He is right about ALL of it. It just depends if you have the wisdom to listen to it.

You are wrong. The barriers to entry ARE higher.

You strike me as the type that will keep asking questions until you get the answers that you want to hear...

[joshril]

1. Contracting can be time consuming and appointment fees vary depending upon your state...
2. He will probably be fired if his employer finds out he's jumping ship. Contracting should be done after he leaves unless he doesn't care if they fire him...
3. Many non-competes are hard to enforce. If he actively attempts to move his book of business, he will likely be sued. If a client calls him, and he moves them to a product that is better, it is unlikely a judge would penalize him, but he could still be sued, spend money on legal fees, and is in violation of the non-compete.

[dr00t]

Look, I came here asking for explanation... not just a simple "He is right". If it does cost money, how much? We aren't BROKE. My family has money for a start-up operation but I am doing the leg work to see how much, or if anyone has any info on WHERE to start looking.

I cannot even find a number to call on any major carriers to inquire about their application process. If you have that info, it would help.

You strike me as the type who never explains anything, and it leaves me wondering why you even spend time on a forum that is meant to SHARE information... - not just provide one-line answers.

[dr00t]

Originally Posted by joshril

1. Contracting can be time consuming and appointment fees vary depending upon your state...
2. He will probably be fired if his employer finds out he's jumping ship. Contracting should be done after he leaves unless he doesn't care if they fire him...
3. Many non-competes are hard to enforce. If he actively attempts to move his book of business, he will likely be sued. If a client calls him, and he moves them to a product that is better, it is unlikely a judge would penalize him, but he could still be sued, spend money on legal fees, and is in violation of the non-compete.

Alright. Thank you. Finally someone who offers more than a four word response.

Can anyone provide me with a starting point on the contracting process? I cannot seem to find any resources regarding this vital step in forming a new agency.

The state is Indiana in case that helps.

[joshril]

Originally Posted by dr00t

Alright. Thank you. Finally someone who offers more than a four word response.

Can anyone provide me with a starting point on the contracting process? I cannot seem to find any resources regarding this vital step in forming a new agency.

The state is Indiana in case that helps.

I don't know what carriers are big in the commercial market in Indiana, but get with your Dad and find out. Contact the carriers and ask about requirements (E&O, appointment fees, etc.). I do know E&O will not be cheap for a commercial insurance operation, but it sounds like you may have the funding necessary.

Other things to consider:

How the business will be structured for tax purposes
How much cash will be needed until the business is profitable
How the agency will gain new clients (marketing, leads, etc.)
How much cash is needed to get the business off the ground (Marketing costs, E&O, computers/software, office space, etc.)

[moonlightandmargaritas]

Originally Posted by dr00t

You strike me as the type who never explains anything, and it leaves me wondering why you even spend time on a forum that is meant to SHARE information... - not just provide one-line answers.

Four posts, and all of a sudden you're qualified to dictate what kind of responses you get, as well as what the forum is for?

Good luck. You'll need it.

[joshril]

Another thing to consider... If your Dad intends to be appointed with carriers he is currently selling, make sure and ask about releases and if he can move his contract... This could get a little hairy...

[robliano]

Originally Posted by dr00t

Alright. Thank you. Finally someone who offers more than a four word response.

Can anyone provide me with a starting point on the contracting process? I cannot seem to find any resources regarding this vital step in forming a new agency.

The state is Indiana in case that helps.

I think if you hit the carrier websites directly, you can find out about appointments or if you email me I can give you my rep's numbers:

robliano@insuranceturnpike.com

[robliano]

Originally Posted by dr00t

You strike me as the type who never explains anything, and it leaves me wondering why you even spend time on a forum that is meant to SHARE information... - not just provide one-line answers.

PS: many people on here will strike you that way, just ignore it, Moonlight is thankfully too busy to answer stuff he doesn't want to answer. other people will step up, like Josh, that's what the forum is about.

[dr00t]

Thanks a lot Joshril. Very helpful.

It will be interesting to see how SEO (Search Engine Optimization) can help jump start a new independent insurance agency looking to rank for local search results.

Currently, that is what I do. I run a search optimization firm, so at least we have one marketing method to explore before dishing out the big bucks on traditional marketing.

I appreciate your help and if you need any advice on search related marketing strategies, please feel free to private message me and ask.

[moonlightandmargaritas]

Originally Posted by robliano

PS: many people on here will strike you that way, just ignore it, Moonlight is thankfully too busy to answer stuff he doesn't want to answer.

Great observation Rob! At the end of the day, I guess I'm kinda like Bobby Knight...(but I don't throw chairs)...

PS-I gave him great advise. But as you can see from his original question, he doesn't want to hear it...

You can lead a horse to water...

[ABC]

My agency is in Indianapolis IN.
We are strickly Health insurance and employee benefits.

I got my PC liscense and looked to contract with PC carriers.
I was told flat out they did not care how much biz. I could bring them they have enough agents liscensed. This came from mulitple carriers. They suggested that I hook up with agencies that already have their lines and sell for them.
At that point I decieded to stick with what I was good at.

So I do think you would have problems finding good carriers to sell. Then your Dads non compete would be a major problem with taking that biz to your new agency.

If you don't beleive what your being told ask your dad what carriers he is selling. Then call those carrier and try to get contracted with them. See what they tell you.

[moonlightandmargaritas]

Originally Posted by robliano

I think if you hit the carrier websites directly, you can find out about appointments or if you email me I can give you my rep's numbers:

Rob, are you involved in P&C? I thought you were a health insurance guy.

[dr00t]

Originally Posted by ABC

My agency is in Indianapolis IN.
We are strickly Health insurance and employee benefits.

I got my PC liscense and looked to contract with PC carriers.
I was told flat out they did not care how much biz. I could bring them they have enough agents liscensed. This came from mulitple carriers. They suggested that I hook up with agencies that already have their lines and sell for them.
At that point I decieded to stick with what I was good at.

So I do think you would have problems finding good carriers to sell. Then your Dads non compete would be a major problem with taking that biz to your new agency.

If you don't beleive what your being told ask your dad what carriers he is selling. Then call those carrier and try to get contracted with them. See what they tell you.

We are also in Indianapolis. Nice to see someone else from Indy on here.

Do you know if experience or amount of time in the business comes into play? Did they even ask you?

I am interested to hear your answer on that, because my dad does have several years in the biz already doing P&C, just not on his own. I wonder if relationship or experience play any part in acceptance.

[saieddie]

Google will put you in touch with most carriers websites.
I also used the search function on the website and came up with threads referencing companies: smartchoice, iroquois group, and sais, that give new agents access to carriers.

Your dad is right. Unless you've got a couple years worth of expenses socked away or you're buying an existing book of business, its really difficult to start an agency up.

[Melmunch3]

The barrier to entry is indeed very high when looking for good commercial lines appointments. It can definitely be done, but don't expect it to be like health or life where you can have all the options you need right off the bat.

From my personal experience, getting contracted with decent commercial carriers usually starts out through an MGA like Atlantic Specialty etc...

It seems like these are largely done based upon relationship. Even if a carrier syas no, there is always going to be someone at the carrier who can make it happen, you just have to find the right guy or gal.

[saieddie]

Thanks Mel for the Atlantic Specialty reference. I've got a hard to place case and was running out of carriers.
Unfortunately, just looked at their markets and doesn't look good for me. Gotta email them just in case.