How to Start an Independent Property and Casualty Insurance Agency

Starting an independent casualty insurance agency can be daunting. Where do I start?  How will I get licensed, find insurance companies that I can represent, and open an office?  If these questions are on your mind, you’re getting ready to embark on the journey of starting an insurance agency.

While you’ll face challenges along the way, there are many rewards that await you, such as healthy profits, the satisfaction of working to protect people, residual income, and the ability to call your own shots.  So…are you ready to begin?

Penguin Insurance Services brings you a step-by-step guide to starting your own independent casualty insurance agency.

Step #1: Write a Business Plan

Not planning is planning to fail.  The first thing you need is a business plan, which is necessary to communicate your values to potential stakeholders and direct your agency onto the right track.  In the plan, explain what services you’ll be providing and how your customers will be acquired.  Map out your budget, address the potential risks your business might face, and describe the business environment you’d like to create.  Most importantly, introduce the people that will be responsible for the insurance agency, and what they will do to help execute your plan.

Step #2: Get Your P&C License

Property and Casualty (P&C) licenses will be required for individuals.  Corporations and partnerships will also require separate licenses to be filed with the state’s Department of Insurance.  Plan for licensing ahead of time.

Step #3: Research Which Insurance Carriers You Need

Appointments with established insurance carriers will be difficult to obtain in the beginning since you don’t have an established track record. Market aggregators, insurance clusters, or networks can help you obtain appointments and gain access to insurance carriers.  Expect to pay them a percentage of commission or monthly fees.

Step #4: Find a Small Professional Office

Retail locations are expensive, and you don’t always need one to become successful.  When starting out, a small professional office may be a good fit.  Keep in mind that most insurance carriers will make office visits to make sure you have a professional working environment that properly represents their brand.

Step #5: Research Your Competition

Research your competitors to learn more about the market and what you can do to get ahead of them.  How many property casualty insurance agents are in your town?  If you are targeting a specific market, are there other agents already focusing on that same target market?  For example, if you plan to market Spanish-speaking clients, do you know if there are other Spanish-speaking agencies in the area?  These kinds of questions will help you learn more about competitors and the market.

Step #6:  Decide Your Target Market

Who are your target customers? Before you can start marketing your business, you need to decide your target market and then make an effort to attract your target customers. Do you want to focus on personal line insurance or commercial line insurance?  Do you want to focus on high net worth clients, or low income families?  Your marketing strategy should be tailored to your target.

Step #7: Obtain Access to Carriers by Joining a Cluster

A cluster is a group of several independent insurance agents. Certain companies don’t allow insurance agents to sell their products unless they meet a minimum quota.  By joining a cluster, you can get qualified for appointments with high-grade insurance carriers. When placing business through insurance clusters with direct access to quote and bind, you can write both personal and commercial insurance much faster than through a wholesaler.

For both personal line and small commercial, you’ll need to write a high volume of policies quickly for success.  But working with an insurance wholesaler could delay simple transactions by 24 to 48 business hours.  Even with large commercial policies, agents gain a significant edge from being able to quote and bind faster with direct access to carries when partnered with an insurance cluster.

Step #8: Obtain training and experience 

Getting training and or experience in the P&C industry is not easy. You can become an employee of an established broker for 3-5 years, you can become a captive agent for 3-5 years then transition.  But if you don’t want to wait for 3-5 years, there’s another option.  Penguin Insurance is a company located in northern California that specializes in providing initial and ongoing training for brand new agents.  We are in parts a cluster and a school.  At Penguin Insurance, we offer classes for the new personal and commercial lines agent; our intense one-week boot camp teaches new agents the foundations of insurance coverage, A to Z of the sales process,  how to run an independent casualty insurance agency and how to manage cash flow of a startup agency.  It is essential for you to acquire this knowledge if you want to grow your independent insurance agency and get ahead of the competition.

Step #9: Do Budget Planning

You cannot afford to be short on the initial budget and operating funds necessary to open the doors of your agency and keep it running. With the help of a cluster like Penguin, you may not need as much money to start an agency as you imagined.  We have seen successful agencies launch with less than $30,000 of initial funds.  Keep in mind, it’s important to set realistic income expectations for the first year.  Know that once you make it to the 2nd year and so forth, your earnings will improve with residual income coming in from the policies sold in the first year.

Step #10: Execute

Once you’ve completed the above mentioned steps, you can then execute your dream of running an independent casualty insurance agency.  Remember that you’ll face roadblocks in the beginning and you’ll have to struggle, but you should not let these things stop you from taking your independent casualty insurance agency to great heights.

Starting a property and casualty insurance business will be like pushing a rock up the hill.  But if you are patient and persistent, one day you’ll reach the top of that hill, and pushing the rock downwards will be effortless.

For more details about how to get started, contact Penguin Insurance Services.