How to Start
Start an Insurance Agency
While an independent insurance agency is not capital intensive relative to other industries, you will need start-up capital for things such as office space, furniture, computer equipment, Errors & Omissions (E&O) Insurance and marketing.
Also realize that it takes some time to build your business, so you will need money to cover your living expenses as you grow your agency.
The bank of choice for Independent Insurance Agents and Brokers (IIABA), InsurBanc, is an independent community bank that was founded by agents exclusively for agents.
Laying the Groundwork
Starting an agency will take time. How long depends on your situation and how much time you can devote to this. It almost always takes more time than you think it will. You can expect it to take at least six months to arrange financing and two weeks to obtain E&O Insurance.
If you are in a current relationship that may involve a non-complete agreement or other contractual issues you may need to consult an attorney.
Additionally, the following steps are required to meet the legal criteria required to sell insurance in Illinois:
- Choosing a Legal Structure for your Business
- Obtain a Business Entity License
- Create a Business Plan
- Obtain a Tax Identification Number (TIN)
- Secure Errors & Omissions (E&O) Insurance
- Obtain a Producer Bond
Access to Markets
You can get your license, but you can't sell insurance without access to insurance companies. For Property & Casualty insurance, most companies are looking for a long-term relationship and a commitment to a minimum amount of production. This is especially true the first year that they appoint you as their agent. Getting an appointment also requires a track record of successful marketing and selling, a marketing territory geographically desirable to the company, and a solid proposed business model.
Agency Management System
It is imperative that you have a good Agency Management System in place. Industry statistics reveal that 90% of agencies use an agency management system. Whether your agency is large or has only one staff person, an agency management system improves agency efficiency and reduces costs.
The same concept applies to Workflow Procedures. Having defined operational steps and processes as well as clear benchmarks assists with growth, profitability, productivity, and financial stability.
Marketing and Networking
Once you get your agency up and running you will need to market your services to insurance intenders as well as make key connections and develop contacts through networking.