Is it even possible to starting an insurance agency with no experience? It’s basically just the same as starting any kind of business. You need to start somewhere, and it just happens that you want to build a business in insurance. And just like the others, you need to come up with a solid plan, legal license and permission, and also solid business structure.
Starting an Insurance Business
Just like it was mentioned before, starting an insurance agency with no experience is similar to starting out any kind of business, no matter what sector you are in. however, in insurance, you will be dealing a lot of other people. Not only you are insuring and protecting them, but you will also deal with claiming and stuff. If you are clueless about the whole thing, or if you are unfamiliar with the process, your business won’t be considered qualified or even reliable. That’s why you need to understand the steps and stages before starting off this business.
Be a Licensed (Insurance) Agent
The first step in starting an insurance agency with no experience is to become a licensed agent first. Different states would implement different requirements and regulations. In some states, you may be a licensed agent within weeks, but in others, you will get the license in months. Find out the overall process within your state. America Independent Insurance Agents and Brokers has their own state branch that can help you with the complete information. You can also consult the National Insurance Producer Registry if you want to know more. Be sure to understand not the requirements, but also the smallest details.
After you have received your license, you should decide what kind of insurance type to sell. It’s completely legal to get the license to sell various insurance types. If you want to, you can focus on one type only. The most common and also extensive lines would include life insurance, health and accident insurance, casualty insurance, and property. But feel free to have another one if you feel like it. Some types may be sold in a package, such as casualty and property or health and life insurance. Check the names in your state as they may be different from one state to another.
In general, most business insurance types are casualty or property policies. If you go with this one, you should be able to sell commercial and personal insurance although most agents would prefer specializing in one type only. What should you do after you have chosen a type of insurance?
- Take the (pre-licensing) class. There would be a coursework focusing on the insurance type you want to specialize in. Most states would allow you to take the courses online or in person, depending on their arrangements. That’s why deciding which insurance to focus from the first place is extremely crucial.
- Schedule the license. Before you can get the license, you will have to take an exam – and pass. These exams are typically done within the testing centers that are managed by the third party companies. They would inform you the final results immediately.
- Apply for the license. You need to fill out the application first and then submit it to the governing body in your state. Providing personal info would be required during the process, so be ready to give info about your birth date, residency, and also Social Security number. It’s possible that you may be required to pay the fees, if any. When the application has been approved, then you should be able to sell the insurance products.
Although starting an insurance agency with no experience is possible, a lot of people want to gain direct experience first. They will likely working in the insurance sector first: working in a brokerage or in the insurance company so they really know what to do, what to expect, and what to prepare. After getting the experience and knowledge, then they would venture out on themselves. It’s always possible to skip this stage, but it means that you will have to learn your game and get the experience along the way. Don’t be afraid of challenges and obstacles. In most cases, they need to experience a lot of fall before you can enjoy great success.
Develop a Business Plan
Just like other businesses, you need to come up with a solid plan. Starting an insurance agency with no experience would require you to develop a real solid and logical scheme. You need to remember that a business plan is about outlining your (future) business: what it looks like and how you want to get yourself there. Never underestimate a business plan, and its complexity. When you have to make one, you will realize that having one isn’t exactly easy because there are a lot of factors and elements to consider about. What’s the structure going to be? Is it going to be a one man show (only you) or will it be a team? Where is the location – do you set up an office or what? What about the marketing efforts? Do you have any plan for promotion? How much can you afford to build one? Even from these questions, there would be more sub-questions you need to think about. For instance, do you plan on having an office or is it going to be completely online? If you are planning an office, where would it be? Why do you choose that particular location? What do you expect from that option?
As you can see, developing a business plan isn’t exactly an easy feat. You need to think things thoroughly and carefully. And you need to be completely serious about the whole thing.
Pick a (Business) Structure
A business structure would determine a lot of things: how the profits would affect the taxes, how your business and also personal assets are separated, and others. Again, don’t underestimate this stage; otherwise, you will be overwhelmed along the way – and it may affect your business continuation. Don’t forget that there is one specific question you need to address: Do you want your business to work with only a specific insurer or do you want to form partnership with different providers?
Captive agents (or agents working with a certain or a particular insurance company) are able to take benefits from the brand recognition. They don’t really need to convince insurers to work or form partnership with them. However, these agents are able to only sell limited options of policies.
Many insurance agency owners are running independently, and they sell products from various companies. These independent agents may need to work harder to market their brand as well as establishing brand recognition, but they are able to start relationships with many providers. This is one of the reasons why you need to think about your business structure seriously if you want to start off with the right foundation.
Register the Business and License It
Don’t forget that you need to have business registration and license. This is the next step on starting an insurance agency with no experience. Be sure to register with the state first; usually with the office of state’s secretary. Most businesses are required to apply for EIN (Employer Identification Number (it’s from the IRS). After you get the EIN, you should be able to open business bank account. The process also requires you to get a sales tax permit, a business license, and also other documentation. Make sure that you understand the requirements set by your state. It’s possible that your business needs a license from the state’s insurance department. Simply collect all the required documentation before you proceed to the next step.
Obtain a Business Insurance
Being an insurance yourself, you should know the importance of an insurance. If you try to convince clients and customers to get insurance, then you need to set up a good example. You need to have a business insurance to protect your (business) assets. Most insurance businesses required professional liability insurance as well as general liability insurance. You also need to consider the importance of having workers’ compensation insurance, commercial auto insurance, and others, depending on your business’ day to day activities, location, and also size. Which insurance would you need the most? Which one is the least important?
Work together with Insurance Companies
The next thing that you need to do when starting an insurance agency with no experience as an independent agent is to send work application with the insurance company whose product you are interested in. If they agree and approve the application, then they will appoint you to sell their insurance policies. However, starting off and developing a relationship with insurance companies (especially directly) can be challenging and difficult without a client base or several years of experience.
To make the process easier, you can actually join an agent network (such as Smart Choice) or professional association (such as Independent Insurance Agents and Brokers of America). Joining them can give you access to providers, allowing you establishing network and relationship to sell the policies. When you join these groups, you can get discounts (for your business insurance policies), marketing materials, and others.
Grow the Client Base
Don’t be afraid to work hard, especially if you just start a business and you are looking for a few clients. When you starting an insurance agency with no experience as an independent agency, you need to hustle first. Feel free to join the local Chamber of Commerce, attend the ads and network events in the local market, make initial connection, and such things alike. If you are tech savvy, you can also think about the online presence. The website should outline clearly the insurance type you provide, what kinds of services you offer, and the customer base you are catering to. Don’t forget to include detailed contact info, so interested clients can reach out to you easily.
What if your insurance business is affiliated with a particular company or insurance type? That’s another marketing strategy that you can implement to get the words around about your business. If you are doing a great job, you may get referrals because customers tend to find agents close to them. But don’t forget to do local marketing as well. Make use of all the possible resources and don’t be afraid to try different kinds of schemes and methods.
Be logical about your expectation. Starting off a business isn’t easy. It takes time to grow and develop, especially if it’s related to insurance. Come up with a solid plan. Make sure that you make it as detailed as possible. Review your options of different marketing strategies and methods. If you are able to utilize all of those strategies, then do it. In the end, starting an insurance agency with no experience may not be easy, but it’s not something impossible to do either.