Starting a New Agency?

Stevis50

New Member
I know guys, here we go, another one of these threads...:err:

First some background info on me. I'm 34, fell into the insurance industry back in 2005 trying to get out of retail. I started off in a call center working for the little green guy, spent 6 months in customer service before moving into a hybrid customer service/underwriting hybrid position. From there I went to Mercury insurance as an underwriter for several years. Now I am in a sales and service position in another call center for USAA doing P&C. I am licensed in 16 states due to the nature of the call center environment since I do have to take calls from the states my region handles. On my own I have obtained a CISR and PLCS designation, and I am one module away from my AINS (they've opened up options so I have to decide what module to take next). I'm considering getting my L&H license on my own as well just to have the additional license, although I have no experience in it and at work I can not talk about or learn about the LOB unless I am moved into that position, which would require posting for the position, interviewing for it, and so on. So work is no help on that particular front.

Although I have insurance industry experience, I do not have AGENCY experience. I have been applying to agencies to try to get some agency experience, and I do well in the interviews but then get declined because they want someone with agency experience. I've flown to MD on two occasions for 5 interviews to go through this same frustration.

I made some great agency relationships when I was an underwriter for Mercury and once I have a solid business plan and some concrete plans in place, I think I can reach out to some old agents for mentoring since I will not be in their markets (I am currently in FL, but looking to relocate to MD, the agents are in NJ). But I'd rather not reach out to them until I have a solid plan in place, and maybe already have the wheels in motion.

I have been lurking on the threads here for a few days now since I've been toying with the ideas of opening up my own IA. NCAgent and Crabcake Johnny's threads are excellent and filled with some great tips and AgencyEquity.com has a lot of good links, and I definitely feel that it's the way to go. Captive usually want way too much to talk to you (I've seen Allstate asking for $70k-$150k liquid depending on the region). Plus while I do need to make a living, I'm very big on doing the right thing for the customer and when it's getting 100/300/50 vs 10/20/10 coverage for the same price, I'm going to urge them to the 100/300 all day long.

While I've been lurking I started making up a spreadsheet of some startup costs to see what I would need to get my feet wet to get this started. Until I read NCAgent's post, I wouldn't have even considered not needing an office space for the first year or two, but then I thought about it and realized that most people are like me and want to go on line and click the quote button and have that convenience, so I don't really need that office right now. So it definitely changed my numbers some. Plus that changes utilities and such since now on my spreadsheet I have a "home office" instead of retail space.

Of course though I have some questions though. One thing I see debated on posts is an agency management system. I'm assuming for the first year or so, especially since I plan on using someone like SmartChoice (most posts seemed to speak highly about them for someone in my position), that I wouldn't need it. But a few posts seemed adamant that you needed it right off the bat to keep cost down later. For those that went this way, which is your experience?

For those that have used SmartChoice, I see that they let list on there EZLynx and that they charge you for the use of it. And I know from my Mercury days that a lot of companies do use that to link to their AMS systems. Is this an option, or a mandatory part of their program? As part of their Smart Start program since they only give you access to 4 carriers on their website, I can't see the $199 setup and $109/mo being worth it unless I'm quoting like I do in my call center now.

Next, LLC vs DBA... I was starting off looking at going with an LLC. But again, as I would want to keep costs lower for starting up, I wouldn't want to need a second license for the LLC. So I think a DBA would be the way to go until I'm more established. Thoughts? And for anyone who is familiar with MD, if I do start off with the DBA and move to an LLC later, any idea how hard it is to move everything over? Or should I just go all in on the first go?

Liability insurance - I know how important this is in general. But if I have no office space and I'm carrying E&O when this starts, should I carry this as well?

I have a friend who is a CPA that recommended Quickbooks and who will help me out with my taxes, I have another friend who is a graphic designer that can take care of my print ad needs, and one that does web design. Looked into web hosting and there are a lot of good deals out there right now, of course I can't move on that until I decide on the DBA or LLC thing because I'll want the domain to be the same or close, depending on what's available.

At this point, I have not actually started any of this, only started looking. It is definitely something that I want, and I know it won't be easy. I don't expect to be making $100k a year the day my website and mailers go out without picking up a phone. I want to actually make something for the work I put into it. I want to build a legacy for my family. And I want to have my personal freedom. So I'm open to all of your advice, please let me know if I forgot anything (because I'm sure I have) and thanks ahead of time!

Steve
 
For your SmartChoice question you should speak with a representative for the area that you are looking at since the terms and conditions vary by state.

For the LLC / DBA question you will need to speak with an accountant about what will work best for your particular situation. If you have very little assets you could look at being a sole proprietor since it is easier and cheaper to setup. Otherwise you should consider the LLC.

Liability insurance depends. If you are working out of your home and you have customers come to your home, your homeowners or renters policy will not cover if that person gets hurt at your home. You can add an endorsment to your homeowners policy for business pursuits but not every carrier will do this. You also need coverage for business personal property. I suggest getting a small BOP to cover you for everything, I mean your going to be an insurance agent now, if you don't believe you need the coverage how are you going to convince others that they will need it?

If you are going to be in MD you could look at carriers that might appoint you directly like Erie since you have insurance experience. They could take up to 6 months to appoint and you will have to be at least 5-10 miles away from anyother Erie agent for them to consider you but all in all they are a great carrier to be with in MD.

Hope this helps
 
Thanks nyc2phil,

The only reason I asked about the liability is at least for the first few months I had no intention of bringing any customer into my own home, since I know from my experience that business pursuits are specifically excluded in most HO and renters without endorsement as you mentioned. But like you said, if I don't feel I need it how can I tell others they do? And insurance is always for that what if... So that's no longer even a question. And as always the benefit far outweighs the cost.

I looked further into that LLC and in MD the filing fees for an LLC are only $159 and the form is so easy my 3 year old niece could fill it out. So I think that's probably the way to go on that end as well just for simplicity in the long run, and to separate the liability from my limited personal assets.

Thanks for the info on Erie. I've never personally done business or anything with them, but I've heard excellent things about them from agents that have worked with them and from customers. I wouldn't think that a company with their reputation would be willing to go with a new agency without a bigger book.
 
Unless you buy an agency or even buy a captive agency like Allstate Which you can buy one very cheap now... chances are you will not make it. Its very hard to start and agency from scratch. Also you better have at least 50K in savings to spend on the new IA to build it up.


Good Luck
 
Unless you buy an agency or even buy a captive agency like Allstate Which you can buy one very cheap now... chances are you will not make it. Its very hard to start and agency from scratch. Also you better have at least 50K in savings to spend on the new IA to build it up.


Good Luck


This seems a little discouraging, I think there are plenty of people on this forum that have built an agency from scratch and are very successful. Didn't you start from scratch? I can see how the lack of producer or agent experience can hinder someone from being successful but I dont believe it is impossible to do so.
 
While I don't like hearing that I probably won't make it, I appreciate the point of view, and that it was said without "why bother you're never going to make it" like I've seen on some other posts. I know it's not going to be easy. But nothing worthwhile ever is, right? If I do fail, then at least I tried. If I don't try, then I can't ever succeed.
 
Hello Stevis one option you might have is teaming up with a current independent agent in your area. If you are in Florida you can e-mail me at [email protected] and I would be happy to discuss some options with you that wouldn't cost you barely any moeny to get writing some business almost immediately. You seem like a go getter and will succeed no matter what obstacles get thrown at you, and in this business you will get a lot thrown your way. Good Luck with everything.
 
Stevis50-
You can absolutely start your own agency and have success. I've done it. Opened 2 satellite agencies and both going strong after 7 yrs. Location, location. And yes you need a few bucks.
Believe in who you are and use your balls.
 
Stevis50-
You can absolutely start your own agency and have success. I've done it. Opened 2 satellite agencies and both going strong after 7 yrs. Location, location. And yes you need a few bucks.
Believe in who you are and use your balls.


I like that.

Matt would mind sharing a little about yourself? What state are you in, how did you get started in insurance, When you went indy did you go through a cluster or did you get some direct appointments?

Thanks!
 
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