Introduction
In this video, I’m going to talk to you guys about how to start an insurance agency from start to finish and every single step it takes along the way. If this is your first time tuning in, my name is Nick Saka. I started my insurance agency in 2017 as a captive Insurance Agency from scratch, and in 5 years, we were able to grow to a $5 million book of business. After acquiring another $5 million book, our total agency premium reached $10 million. We’ve done all that in just 5 years. On my YouTube Channel, I talk all things entrepreneurship, insurance, and self-development. Be sure to follow me on my social media platforms, and if you want to know everything that I did to grow my insurance agency from start to finish, check the link in the description. I recently came out with a course on our entire blueprint and everything we’ve done, so I hope that brings you value. Now, let’s get started.
The Passion for Insurance
Alright, so first and foremost, I am very passionate about this industry. I love the insurance industry; this industry changed my life. Prior to this, I was a banker for 7 years, working my way up the corporate ladder. I always knew I wanted to start my own business, and I aligned perfectly with opening an Allstate Insurance office. I haven’t looked back since, and I’ve loved this journey. There’s nothing better than selling a product that everyone needs by law, and it’s residual – it pays you every six months as long as a customer renews. It’s just an awesome industry.
Deciding Between Captive or Independent Insurance
So, the very first decision I think you have to make when starting in the insurance industry is: do I want to open an independent insurance office or a captive insurance office? Obviously, my experience has been with a captive insurance agency, but I’ll talk about the pros and cons of both.
Captive Insurance Agency Pros and Cons
One of the pros of being a captive insurance agency is that it is set up for you in a way. For example, Allstate’s logo is on the front of my door, and I use their software. I’m exclusive with this one company, but everything else within the office is mine. The desks, the lease – everything is mine, and I own the asset that I can sell someday. However, with some other insurance agencies, like State Farm, you don’t own the asset, and you’re unable to sell it, which I think is a detriment.
Working with a captive insurance company also means you’re only working with one company, so you only need to know the guidelines for that one company. It’s pretty niche and makes it easier in some ways. It’s almost like having training wheels. However, the cons are that if a customer wants to leave, you’re unable to find them a different carrier, which can be frustrating. Also, you don’t have as much control over your business—there are company guidelines that you must follow, and that can be limiting.
Independent Insurance Agency Pros and Cons
On the other hand, an independent brokerage has more control and more flexibility. You can partner with multiple carriers and have more control over your business. Independent agents can also partner with aggregators, clusters, and agency networks for better access to options. However, the cons include feeling intimidated by the lack of support that comes with a captive agency. Independent agents may also face challenges getting appointed with certain carriers or learning the ins and outs of multiple carriers.
Insurance Licenses and Business Setup
Once you make the decision between independent or captive, you need to focus on getting your insurance and business licenses. For my licenses, I had to get Property and Casualty, Life and Health, and later Series 6 and 63, which are no longer required in 2022. You’ll also need a business license, and I recommend consulting a CPA for guidance on whether to file as a sole proprietor or an S corporation. After you get your licenses, you’ll need to look into capital requirements for starting an agency. Captive agencies may require between $25,000 to $100,000, while independent agencies might be able to start for as low as $5,000.
Legal Structuring and Location
When structuring your business, I recommend considering an S corporation. Avoid sole proprietorship due to the risks involved. As for the physical location, I advise saving on leasing costs. Don’t overpay for a high-end location; instead, use that money to invest in employees and marketing. Many agencies are also offering the ability to work from home now, which could be a good option.
Hiring and Staffing
You’ll also need to hire employees, and the best way to find them is through social media or platforms like Indeed. Reach out to your personal circles, and don’t forget to use tools like resume finders to find candidates with relevant experience. You can also consider working with hiring services if you have the capital.
Insurance Policies to Protect Your Business
There are a few key insurance policies you will need to protect yourself and your business. These include Errors and Omissions insurance, a Business Owner’s Policy (BOP), and Workers’ Compensation insurance. These will protect you and your staff from potential errors and liabilities.
The Challenges and Reinvestment in Your Agency
This industry is not easy. It took me at least two years before I was profitable. It’s going to be about finding the right mentors and using available resources like YouTube, podcasts, and books. Invest in your team’s development by attending masterminds and events. This will help you grow your agency over time.
When Can You Expect to Be Profitable?
Many people want to know when they’ll start making money, but this business isn’t get-rich-quick. It’s a slow process, and in my experience, it took at least two to three years of hard work before I started making good money. It’s important to reinvest your profits and play the long game. If you give it at least five years, you can build a successful business.
Conclusion
I hope this video helped you understand how to start an insurance agency and what to expect along the way. Remember, this is not an easy journey, but if you stick with it, you’ll eventually see the fruits of your labor. Thank you for tuning in, and I hope you find success in your insurance journey.
Let me know if you’d like me to adjust anything!
