Do you wish to start your own insurance agency? Regardless of how long you have been in the insurance industry, you still have a lot of work to do. With focus and dedication, you can make this dream become a reality.
If you are ready to get started, here are some factors you need to consider in starting your own insurance agency.
Insurance Licensing
Depending on what kind of insurance business you want to start and which state it will be in, you may need to get a certain license first. Most of the time, taking the test and getting the license cost money. Decide on what insurance services you will offer like life insurance, final expense, health insurance, long-term care insurance, etc. Aside from money, be prepared to undergo training and assessments before obtaining a license.
Even though licenses are different from place to place, business owners should set aside at least $50 to $250 per license they need, including any county or city licenses. For example, to get an insurance license in Texas, the Department of Insurance charges between $50 and $150.
Legal Business Structure and Taxes
Your business structure affects a lot of things, like how your business profits are taxed and how you keep your personal and business assets separate. Consider answering this question too: Do you want your insurance agency to work with just one insurance company or with a lot of different companies?
Agents who only work for one insurance company can benefit from the company’s brand recognition. They do not have to try to convince other insurance companies to hire them. On the other hand, they can only offer a small number of insurance plans.
A lot of the other people who own insurance agencies are independent agents who sell products from more than one insurance company. Independent agents may have to work harder to build and market their brand to customers and insurers, but they can start relationships with many insurance companies.
Another aspect of business that you need to think about is taxes. To report and collect sales tax, you must register your insurance business with the state. Registering a firm for tax collection requires additional steps and a charge. In most jurisdictions, the cost is around $50, but the agency will receive a percentage of sales subsequently.
If your business structure is a Limited Liability Corporation (LLC), in most cases, the LLC’s members are responsible for paying federal income taxes. Only LLC members pay federal income taxes, not LLCs.
It is wise to consult someone who is knowledgeable about legal matters like CEOs of insurance agencies, like Mr. LaQuentin Jenkins, CEO and President of Simple Choice Insurance Brokerage, so you are guided in the step-by-step process of becoming a legal business
Office Space and Equipment
When starting your own insurance agency, it is also important to choose the right office space and equipment. If you are interested in leasing or owning a working space, costs for office space vary from state to state, space to space, and location to location.
For example, insurance office space in a city center will cost a lot more than insurance office space in a small town or suburb. You should also think about how much it will cost to buy things like computers, printers, fax machines, phones, and other office equipment.
Aside from leasing or owning office space, work-from-home set up is common nowadays. More specifically, changes to the usual office structure occurred when the pandemic happened. The work-from-home set-up can be a great option for you as you start. One of its advantages is that you do not have to pay rent and can run the business while looking after your family.
Staffing
This is another important factor to consider. Depending on how many employees you have and what they do, you must pay them.
An insurance agency typically has these positions:
- insurance agents who are tasked to sell policies and give quotations;
- marketing specialists to help increase brand awareness and conduct marketing research; and
- customer service representatives to answer calls and follow up daily agency activities.
Salary oftentimes matters depending on the tasks and position of the staff. In smaller agencies, one person may cover numerous jobs. Just remember, setting agency and personal goals motivates employees. Aside from salary and incentives, show genuine care for your staff and establish professionalism among the team.
Also, you might want to outsource or connect with accountants and lawyers for legal business requirements.
Marketing and Promotion
Marketing and promotion are key to sales. Consider integrating and brainstorming marketing ideas with your team on how you can establish your name and branding in the market. This may include talking to clients and building networks through online events or community service events. Online presence is also necessary nowadays. Start building your website and social media platforms like Facebook, Instagram, and LinkedIn.
Do not be afraid to explore other marketing strategies like email marketing, calling prospects, and hosting events. With the advent of technology, you have the option to automate your business processes to support clients and staff.
Once you have a new lead, your sales process takes over. Modern clients want to be in touch all the time, usually through calls, email, or social media marketing. With ongoing relationships, renewals happen on their own.
With the given list, starting your own insurance agency really requires vision, courage, dedication, and risk. As an insurance agency, we know the struggle of starting a business from scratch. That is why we want to help. Simple Choice Insurance Brokerage PLLC is hosting virtual events to provide more details about the process of starting your own insurance agency. Over time, this could be a six to seven figure opportunity; however, it will take time. It is not a get-rich-quick scheme.
Get ready to start
As you venture to start an insurance agency, your ability to connect with your customers and your community is one of the key factors that will lead you to success. You can make a great living doing what you love and still be a valuable member of your community and the insurance industry. So, gear up and get ready to start and rock!
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