There are a ton of advantages to going independent if you’re a captive insurance agent. Think about the obvious advantages: being able to promote your own brand, being able to offer the most cost effective solutions for your clients, and being able to use big brand names at your discretion.
However, if you’ve ever considered breaking away from your captive insurance company to go independent, there are 5 important things you should keep in mind first before you make the jump. Making the jump without knowing the risk factors is a recipe for failure.
1. YOU NEED MONEY FOR LIVING EXPENSES, MARKETING, AND SET UP
This is probably the most important factor. It may take as long as 3-4 weeks to start booking appointments and holding meetings. Then even after you sell policies (depending on the type of insurance) it may take 1-2 weeks (or longer) for the policies to get issued. Then you have to worry about commission lag time, especially if the carrier uses just in time appointing; this means they don’t appoint you until you submit your first piece of business. Unfortunately, carrier appointments can take awhile, especially if you have blemishes on your record. It’s extremely important that you have enough money in the bank to pay for 1-2 months of living expenses and enough money for marketing and set up costs.
Here are some costs you may need to worry about:
- Errors & Omissions Insurance: Free – $100/mo
- Website (for branding purposes): $50-$300
- Leads: $6-$50 per lead
- Facebook Ads: $20-$300
- Networking Membership: $600 per year
- Certificate of Assumed Name (if you’re not using “first and last name insurance agency” as your brand): $30ish
- Business filing (if you’re not going to be a sole proprietor): Cost varies
- 2nd Line App (you need this so you can have a dedicated business line): $2.99/mo
- Office (unless you’re home-based): $100-$1,000/mo
Here are some free resources:
- Free Do Not Call Scrubber (helpful if your somewhat tech savvy; it’s up to you to scrub your phone numbers regularly)
- Do Not Call database (You can subscribe to 5 area codes for free. Just download the lists and import them into your Do Not Call scrubber. Boom, you’ll get a list of callable phone numbers.)
- Reference USA is a free directory that is extremely useful. You need a library card to access the database, but this will give you the ability to generate all kinds of lists lists (new businesses, new movers, high income households, etc.)
- Don’t forget to build an online presence using Google My Business, Facebook Business (you’ll need a personal page first), LinkedIn Business (you’ll need a personal page first), Bing for Business, Manta. These should help make it easier for people to search for your business.
- Phone number directories (search your business phone number and leave some good comments so when people search your number, it’s not marked as a scammer)
- ZOHO CRM is the best CRM resource today. It’s better than Salesforce and that’s a fact. Not only can you make marketing emails look extremely professional, but you can easily import lead lists in real time. Best of all, you can have up to 10 free users.
- Mail.com is my favorite email service. It’s free and you can choose between several domain options. For example: @Consultant.com or @Insurer.com.
- FreeConferenceCall.com is the best webinar hosting service out there. It’s completely free and can hold up to 1000 attendees. Other hosting service carriers cost between $50-$109 per month!
Whoa! That’s a lot of info. Let’s move to #2.
2. YOU WILL NEED TO PAY FOR EVERYTHING
This sort of piggybacks on #1 but seriously, you will need to pay for everything that you may have had help with before (like business cards, marketing materials, E&O, etc.).
The trade off is that commissions are usually a lot higher. For example, a captive agent selling whole life insurance will likely be paid right around 50% commission. An independent agent can be paid up to 120% for that same product! In addition, you’re not limited to specific products. If you want to sell employee benefits, you can find a carrier that does well with this, whereas if you’re captive, you’re limited to the products your carrier provides – and even if they provide an array of products, it’s unlikely they are competitive in everything.
3. YOU SHOULD DO SOME RESEARCH BEFORE CHOOSING A(N) IMO/BGA/FMO/AGA
Your IMO (independent marketing organization, shortened to IMO which is the most commonly used term today) is the platform that connects you to the insurers. Unless you can prove that you will provide high sales volumes, you usually can’t get directly appointed with most carriers; they make you use an IMO.
Some IMOs are better than others. Some act like your employer (which is a big no-no). Others provide great training programs. You should consider what will help you the most when choosing an IMO. Do you need a good training program, free leads, higher commissions, passive income opportunities, renewals, free E&O, a good case manager? There are often trade offs. Free leads usually means lower commissions. Passive income and commission override structures usually start you out at the bottom (multi level marketing structured companies), but when you make it to the top, you’re set.
Be careful when selecting an IMO. The ones that treat you like an employee will often micromanage your activities and will criticize you for not following “their model” when your sales volume is low. Then they’ll convince you to attend (and even travel to) seminars and spend hundreds, maybe thousands, of dollars to get you to buy in. By all means, stay away from these IMOs. They will overemphasize and overexpose you to their successful agents, but won’t tell you about the hundreds, maybe thousands, of people who started at the bottom and failed.
4. FOLLOW YOUR NON-COMPETE & NON-SOLICITATION AGREEMENTS
Remember, you’re starting at the bottom again if you make the switch. You can’t take (or even talk to) your existing clients. Even if they come to you wanting to do business, you are walking on thin ice. You’re going to need to do whatever it takes to find new blood.
5. HAVE A PLAN AND HAVE IT LOOKED AT BY A PROFESSIONAL
It’s going to be ideal to put together your business marketing plan before you even decide to go independent. Weigh out the alternatives. What is your target market? You shouldn’t try to offer too many products at once. Find one thing you’re good at and have that be your bread and butter; you can learn the other stuff you’ve been wanting to do after you have some significant cash flow coming in.
By having a professional consultant look at your marketing plan, you’ll get a good sense of whether your plan is viable and sustainable. You’ll know exactly what you need to do to meet your income goals. You’ll know who to target and what products to position. Failing to plan means you are planning to fail.
OTHER THINGS TO KEEP IN MIND
Keep in mind that not everybody has a good business acumen and the drive to make this work. In fact, most people will fail. As harsh as this sounds, it’s true. You always hear about the rags to riches success stories. You never hear about the people who failed. Why? Because it’s not interesting. Everyone wants to read about the successful stories, because it’s the life everyone dreams of.
If you want to succeed at being an independent insurance agent you need these things: good business sense, resiliency, the ability to endure hard times, excellent sales skills, the ability to spend money when it makes sense, the ability to build mutual relationships with other professionals.
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