What you are most likely referring to are wholesalers/MGA's. They are appointed with the carriers, and they take a percentage of your commission and they are the agent listed on the policy as being the agent. You are basically given a 'referral fee' and then when you are ready to rewrite the client, you can. Your underwriting guidelines would be stricter than if you were appointed directly, so be aware that it will be difficult to place any business. But, doable. Networked Insurance Agents might also be able to help in Ct or at least refer you to a similar agency. I am not sure that any of them "take you under their wing to guide you"... they may claim to, but I havent met anyone who said they actually were there keep you from making mistakes. You are still pretty much on your own, but they can answer specific questions for you. In Ca, I was able to feel my way around without much guidance because I had 8 years in the industry writing for other brokers so, I just had to learn the ropes of being accountable to the government, IRS etc and thats enough to make you sweat, add learning to write a policy without being sued for not providing the right coverage and you are going to lose a little sleep. Commercial is probably not the best way to "enter" the industry but, everyone starts somewhere and it IS where the money is.
Startup P&C Agency Needs Direction
- Thread starter bootstraps
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bootstraps
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So MGA's and wholesalers are the same? I would think that commercial is easier. Why do you think its harder? It seems easier that you have to meet with one 100K account vs. one hundred, 1K personal accounts to get the same commission. Retention probably isn't that good, but there are endless business's looking to save money.
Commercial is harder because the policies are more complex. If you think you will win a $100k account "just because you asked for it" you have to consider the insured's current broker with 20 years of experience being on your tail to keep that policy & he will poke holes in the one you offer until the client is scared to switch insurers. Being a start up, you wont have MANY places to quote the risk with, whereas that broker has MANY places and for a $100k account you bet he's remarketing every year, making sure he doesnt have a better price to offer the client. He WANTS to keep that $100k customer. Dont count on getting those large accounts right away, please. Your Personal Lines will be your bread and butter. Those clients will be more loyal, but yes, its less $. Just dont sell it short because it will get you by. How much experience do you personally have in writing commercial policies? They ARE complex. The differences are vast. And if you have a guy who's paying $100k for his policy and you can get a quote to come in at $90k... your policy will be lacking something. Your job is to find out if that something is a feature that's going to cost him down the line. I've seen some terrible messes come from not knowing your commercial policies. You will have to LOSE a lot of business before you are skilled enough to earn it, so please be conservative about your projected gains in the beginning. I dont know if Wholesalers are the same as MGAs but out here, its the closest in relation. I've sometimes heard them called wholesalers, but in California, how they operate doesnt sound anything like wholesaling. CT might be different and allow for different operations. Cali is pretty strict.
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Commercial is harder because the policies are more complex. If you think you will win a $100k account "just because you asked for it" you have to consider the insured's current broker with 20 years of experience being on your tail to keep that policy & he will poke holes in the one you offer until the client is scared to switch insurers. Being a start up, you wont have MANY places to quote the risk with, whereas that broker has MANY places and for a $100k account you bet he's remarketing every year, making sure he doesnt have a better price to offer the client. He WANTS to keep that $100k customer. Dont count on getting those large accounts right away, please. Your Personal Lines will be your bread and butter. Those clients will be more loyal, but yes, its less $. Just dont sell it short because it will get you by. How much experience do you personally have in writing commercial policies? They ARE complex. The differences are vast. And if you have a guy who's paying $100k for his policy and you can get a quote to come in at $90k... your policy will be lacking something. Your job is to find out if that something is a feature that's going to cost him down the line. I've seen some terrible messes come from not knowing your commercial policies. You will have to LOSE a lot of business before you are skilled enough to earn it, so please be conservative about your projected gains in the beginning. I dont know if Wholesalers are the same as MGAs but out here, its the closest in relation. I've sometimes heard them called wholesalers, but in California, how they operate doesnt sound anything like wholesaling. CT might be different and allow for different operations. Cali is pretty strict.
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Commercial is harder because the policies are more complex. If you think you will win a $100k account "just because you asked for it" you have to consider the insured's current broker with 20 years of experience being on your tail to keep that policy & he will poke holes in the one you offer until the client is scared to switch insurers. Being a start up, you wont have MANY places to quote the risk with, whereas that broker has MANY places and for a $100k account you bet he's remarketing every year, making sure he doesnt have a better price to offer the client. He WANTS to keep that $100k customer. Dont count on getting those large accounts right away, please. Your Personal Lines will be your bread and butter. Those clients will be more loyal, but yes, its less $. Just dont sell it short because it will get you by. How much experience do you personally have in writing commercial policies? They ARE complex. The differences are vast. And if you have a guy who's paying $100k for his policy and you can get a quote to come in at $90k... your policy will be lacking something. Your job is to find out if that something is a feature that's going to cost him down the line. I've seen some terrible messes come from not knowing your commercial policies. You will have to LOSE a lot of business before you are skilled enough to earn it, so please be conservative about your projected gains in the beginning. I dont know if Wholesalers are the same as MGAs but out here, its the closest in relation. I've sometimes heard them called wholesalers, but in California, how they operate doesnt sound anything like wholesaling. CT might be different and allow for different operations. Cali is pretty strict.
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I agree with the previous poster that getting that $100,000 account isn't going to come easy in the beginning. Even if you really want to start out in commercial lines, the businesses you will get to switch are in the much smaller premium range. Think $1500-$5000. And these are the people who are quick to switch to whoever can save them a buck. If you are going to go this route, its certainly not impossible but I would find a target obtainable niche and stick with it until you know how to write that type of business inside and out and then pick another type of business. I started with auto repair since most of them are pretty much the same though they do vary as well.
Also, I just recently started a website for business insurance agents to come together and share marketing and prospecting ideas. You should check it and out follow. njbusinessinsurancelady It's still in the beginning stages but I'm sure it will be a valuable resource to all of us as it gets bigger.
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- #15
bootstraps
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I am hungry. I know a lot of biz/RE owners with 5K-100K+ policies. I guess I showed my lack of experience when I said "easier". I'm sure its not easy. The approach I am trying to take is to go after the big fish that I know, get a few accounts to generate revenue, than with the cash flow invest in street/local marketing for personal lines. Commercial is more networking it seems to get to the big money decision makers. So if you can hustle , it seems like the place to be. But as I have all ready heard, the bigger they are the sooner they leave, so retention is horrible. This is where I agree to have a strong personal base in case of bad years on the commercial end where more are leaving than you are acquiring.
As long as you are objective, hope for the best, be prepared for the worst you should be fine. Just make sure everyone involved in investing into the business knows what to expect. Real Estate is an "instant gratification" industry. You sell something, you get BIG money right away. However, each month you are starting over (same for the first year in insurance but not subsequent years). Insurance is not a get rich quick industry, you make the sale, then busy yourself trying to keep it. And your commissions arent always given to you 100% up front. Some companies do, some dont. By year 2, you hopefully have some renewals in to help you keep your head above water.
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bootstraps
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How much do you think is realistic for a new producer in a new agency with very little knowledge (other than what was taught in the license class and the little I know from being on the customer end) to sell in their first month?
G
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Why in the hell are you writing a NOVEL here and its to difficult to read, ever heard of a paragraph? good grief
thenoobguy
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- 19
@Miss Teralyn - Great advices. This forum is awesome and its good to see people are willing to take the time to educate the newcomers and provide knowledge that helps others succeed. Without this forum I'll be completely lost in starting an agency. This forum is worth $$$$ 
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