by igotit0821 » Wed May 12, 2010 08:11 pm
After working at an Allstate Insurance agency for a year, I'm looking to open up my own insurance agency (P&C for now, with possibility of L&H in future) in my home town area in NJ. Can anyone offer me an advice on how to go about opening an indepdendant agency in NJ - A general process / Where to look to buy a book of business, if available / or How to get appointed through major carriers when starting from scratch, etc. / Who are the wholesalers in NJ I may work with / Are there any franchise companies for insurance business - and is this a good way to do the business? I'm ready and able to invest my time and capital for some period of time to build up business. Also have a partner to inject more capital, if necessary. Just need to find out where to start. Any advice would be appreciated. Thank you.
Posted: Thu May 13, 2010 02:36 am Post Subject:
Excellent questions. Starting your own independent agency is distinctly unlike any other business start-up outside of the financial services business. I have been a partner in an IA and it was both the best and worst thing I have ever done. You need, first and foremost, to make sure that anything you do in your quest for free agency doesn't go against any contract(s) you may have signed with your present carrier.
Before you start investing anything but time, you need to clarify a number of things. Since you specified P&C:
What type of client are you trying to attract? Preferred risk types? Any kind of risk clients?
Personal or commercial or both?
What type of start-up capital do you have or are willing to invest?
What type of legal business entity are you going to form? Tax ID stuff? Your own personal knowledge or willingness to pay for expertise?
Office location?
You get the drift. Do this homework first; you could add a lot more to this list if you thought about it for a while. You have to do the prep work up front or you're toast.
Start-up, first-time agencies can have a difficult time acquiring appointments with preferred carriers. Many of them think that you are going to try and throw anything you can at them for new biz and you'll cause underwriting to have nightmares. It rarely happens due to the underwriting guidelines and most agents being somewhat intelligent in applying those guidelines to their new business submissions.
You can normally get non-standard appt's. fairly easily and without much hassle. A few of them will appoint you simply by receiving an application from you. Weird. They'll check you out, of course, through the NIPD and NIPR, but if you're good to go they'll consider the app.
We did most of our business in the commercial side of things when looking at our P&C biz. That's where the money is. They're also a pain in the butt when it comes to audit time. That's why you hire assistants. :D
In that you only have a year in the biz, and don't take this personally, you're still green. If you have experience beyond your Allstate days, you didn't say. Your partner that's offering some capital, again nothing personal, hopefully has the experience to add to this equation.
I'm not trying to discourage you at all, it's just going to take a lot of work. You'll be your own boss, you work your a** off, and if you succeed, in a few years it's gravy. Emphasis on the "work your a** off" part.
There are companies and consultants that offer services catering to what you need in terms of assistance, but they can be kind of expensive depending on your capital/surplus dollars.
InsTeacher 8)
Posted: Thu May 13, 2010 03:11 am Post Subject:
Thank you so much for your insights, InsTeacher!
Yes, I've been told and I understand it's going to be a long and winding road before I get into a comfortable zone. But, I've come to a decision that this insurance business is the one I'm all in. Therefore, it's more like whatever it takes and however long it takes for me.
As you said I dearly want to start off correctly, but I just have no source of information. Would you be kind to provide me with information on "companies and consultants that offer services"?
Thank you.
Posted: Fri May 14, 2010 12:14 am Post Subject:
igotit0821, thanks for the post. I have sent you a PM on this. Go to your "my page" (link on the right side of this page) to see the message.
InsTeacher 8)
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