Starting Scratch Independent Agency

bliss171

Expert
30
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!
 
I have no ownership interest in my captive agency. When I leave, the company owns the book of business. This is another major reason I am looking at the indy side.
 
I was with a local company in my state and I was captive. They got out of the insurance industry and thus I lost my agency, however they kept all the clients till they could sell off their business. Anyways, I loved what I did, but knew I needed to get out on my own. I contacted local independent agencies specifically looking for an agency/brokerage company that would allow me to write under their contracts they have with their carriers and I would own my book.

The company I joined with gave me an office space with them I pay them 30% of my commission and I get 70%, I am able to get 50% of my contingency checks as well, I own my book and I as able to start up and go right away. I deal 95% in personal lines and 5% in commercial and have been having great months since. It has only been a year and a half now and I am making what I was making after 3 years with my captive company I was at (including the salary that I had with my captive company).

There was no funds or salary with my cluster group I joined but I just trusted in my work ethic and made the leap. It turned out to be the best move I ever made and I was able to build my book up very quickly
 
I was with a local company in my state and I was captive. They got out of the insurance industry and thus I lost my agency, however they kept all the clients till they could sell off their business. Anyways, I loved what I did, but knew I needed to get out on my own. I contacted local independent agencies specifically looking for an agency/brokerage company that would allow me to write under their contracts they have with their carriers and I would own my book.

The company I joined with gave me an office space with them I pay them 30% of my commission and I get 70%, I am able to get 50% of my contingency checks as well, I own my book and I as able to start up and go right away. I deal 95% in personal lines and 5% in commercial and have been having great months since. It has only been a year and a half now and I am making what I was making after 3 years with my captive company I was at (including the salary that I had with my captive company).

There was no funds or salary with my cluster group I joined but I just trusted in my work ethic and made the leap. It turned out to be the best move I ever made and I was able to build my book up very quickly

I would look at the Premuim Group out of Denver. Shawn Michael Walker is the contact there & posts here on the Forum: [email protected]

I'm not sure how they do in MO, but I'd also take a look at the Iroquois Group. I have a friend looking at them & he says they are excellent for what he wants.

Lastly I say check them all out & have your attorney look at the contract before you sign. From what I've read/heard about, once you are married to one of these groups, it can be expensive if you ever decide to sell or leave the business with some of them.
 
I am currently with Iroquois Group and it has been a waiting process to get going, but I know it will take off soon. I have heard all cluster/MA are this way.... Slow to start but one of the only ways to get with larger companies when scratch.

They will work with you on your contract as they see fit. I definitely recommend having at least a years salary saved and access to more if need be. 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. I started the process about 2-3 months ago and am just now seeing a glimmer of light at the end of the tunnel.... Glimmer of contracts with big companies that is. The key is patience, I suppose... Which I lack.

Good luck and make sure to check all avenues thoroughly before jumping in head first.
 
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