Considering a career as an independent insurance agent? There are a lot of reasons it can be a smart and rewarding choice.
In fact, the team at US News reports a 10 percent projected employment growth from 2016 to 2026, meaning nearly 50,000 jobs should become available by the end of that period. And the earning potential is significant. The median salary for insurance sales agents in 2016 was $49,990, Marie Huntington at Bizfluent writes, with those in the 75th percentile earning $77,140.
With job opportunities available and the possibility of earning a very good salary (the top paid 10 percent made nearly $130,000 in 2016), it’s easy to see why so many people are attracted to the industry. But to increase your odds of success, you’ll want to follow the right formula.
Here are some tips for getting the ball rolling when you’re just starting out.
Develop the Requisite Skills
There are some specific skills you’ll need to thrive in this career, and customer service is one of the most important according to Bright Network, a UK-based job site that connects graduates with employers. Independent agents have a close level of contact with clients, essentially acting as a liaison between insurance companies and their customers.
Marketing strategist Gregory Ciotti says clear communication skills, attentiveness, persuasion and the ability to “read” people all contribute to excellent customer service skills.
Another skill is problem-solving. Every situation is different with each customer having their own unique needs. So you’ll need to get comfortable with finding creative solutions, and be adaptable so you can think outside the box when necessary.
It’s also important to be organized. You likely be dealing with several different customers — each having different types of insurance coverage. It’s critical to keep everything straight and maintain up-to-date records that are organized and accurate.
Financial counselor Mark P. Cussen also touches on the importance of having a “strong personality,” saying that having a high energy level and genuine enthusiasm plays a big role in creating positive customer interactions. This is what ultimately encourages people to buy coverage and makes them want to keep doing business with you.
Get a Solid Education
A high school diploma or equivalent is all that’s officially required for this career path. And it’s certainly possible to get by without a college degree.
However, Steve Foster at Seattle Post-Intelligencer explains that having at least a bachelor’s degree is preferred. He notes that more than one-third of insurance agents in the US have a bachelor’s degree.
Ideally, you’ll have studied relevant subjects such as business, finance or economics, which will better prepare you for a career as an independent agent. Some colleges specifically offer a bachelor’s degree in the field of insurance.
Best Value Schools has a list of the top 25 ranked business and economics programs they consider the best return on investment. If you’d rather study from home, they’ve also made note of three online business degree programs you can look into.
Acquire the Necessary Credentials
“As you might imagine, there are a few legalities involved with becoming an independent insurance agent, Midwest Insurance Agency Alliance notes. “Each state has a unique set of requirements that need to be adhered to. A few of these could possibly include recurring certifications, licensing exams, multiple licenses for different types of insurance, or continuing education courses.”
That means you’ll need to familiarize yourself with state-level requirements before you can obtain your license. The list of insurance agent license requirements by state from FindLaw contains most of the information you’ll need for this and will direct you to the necessary resources.
You’ll typically need to pay a fee and complete a pre-licensing training course as well as pass a licensing exam. You should also be aware that you’ll have to periodically renew your license and participate in continuing education.
Write a Business Plan
As with any business, the first step in actually building an independent insurance agency is to write a business plan, the team at Insureon Solutions writes. This is essential for securing capital, zeroing in on your target market and choosing your business location.
Some of the specific elements of a business plan include defining your target market, suppliers and competitors, identifying how you’ll find customers, determining the types of coverage that you’ll offer and what distinguishes your brand from the competition.
Beyond that, you’ll need to figure out the risks you face, your initial budget as well as cash flow projections.
Creating a well laid out business plan gives you a concrete timetable so that you stay on track, Linda Ray at Arizona Central writes. Most agents find it creates a sense of accountability, which is extremely helpful for getting you where you need to go. And If you’re not sure how to get started, Bplans has a sample you can follow.
Take Care of the Legalities
Next, you’ll need to pick a legal structure such as a sole proprietorship, partnership or limited liability corporation. This determines your level of liability and how you approach business insurance.
Beyond that, Insureon Solutions mentions several other steps you’ll have to take. These include:
- Register your business name (learn how from law content writer Brette Sember, J.D. at LegalZoom).
- Get a tax ID number (apply for one via this IRS resource).
- Register your business with your state.
- Obtain a business license/permit (apply for these through the SBA’s website).
- Obtain errors and omissions (E&O) insurance.
It may sound like a lot, but taking it step-by-step will ensure that you address the vital legalities and prevent unnecessary headaches later on down the road.
Find Office Space
Finding and leasing the right office space is crucial for getting your insurance business off the ground.
First figure out how much space you need. You can get a rough idea by allowing 75 to 150 total square feet per employee, Kiah Treece, J.D. at FitSmallBusiness explains. Remember to account for future growth when calculating this number.
Next, decide what your budget is. Treece points out that the average cost per square foot will vary considerably depending on your location. So you’ll want to research how much it is in your area. Also, be sure to factor in utilities because this will raise the overall cost.
Then search for suitable spaces for rent in your area. Treece recommends working with a tenant-broker because they can streamline the process, saving you time and assisting in negotiations.
Get Appointed with Insurance Carriers Ahead of Time
You could argue that the initial phases are the most difficult. So how can you minimize the friction and get firing on all cylinders as quickly as possible? One way to save yourself a lot of stress is to get appointed with insurance carriers before you actually try to find customers.
“This can be a time-consuming and arduous process but stick with it because you need those appointments,” the team at Voldico Insurance writes. “Be prepared to provide proof of licensing, errors & omissions coverage, your agency’s business plan and to sign contracts and agreements with the carriers.”
That way you’ll be ready to go once a customer wants to purchase a policy from you, and they won’t have to deal with any delays.
Implement Key Technology
Voldico also suggests investing in the right technology to streamline tasks and expedite your business growth. This doesn’t necessarily have to be a specialized agency management software, but it should be robust enough to meet all of your needs, while being scalable enough to accommodate future customers.
Other tech must-haves include a comparative rater, a Voice over Internet Protocol (VoIP) phone system, cloud storage and e-signature software, Heather Turner at Insurance Business advises. The last allows customers to sign documents electronically instead of requiring them to print and sign, then scan or fax.
On top of that, Turner says that it’s a good idea to invest in a top of the line firewall to fortify your digital security and prevent cyber attacks.
Learn from Experts
It’s easy to find yourself overwhelmed initially. But you can position yourself for success by surrounding yourself with other agents who have already been there and done that.
It’s a good idea to join professional insurance agent associations or educational institutions, Lynette Gil at ThinkAdvisor says. These can be a huge help to fledgling independent agents.
Some specific resources she mentions include the National Association of Insurance and Financial Advisors (NAIFA), the National Association of Professional Insurance Agents (PIA) and the Association of Insurance Compliance Professionals (AICP).
In addition to reducing your learning curve, membership can present some valuable networking opportunities.
Paving the Way for Success
A career as an independent agent can be extremely rewarding. Along the joy that comes with starting your own insurance business, you’ll likely have long-lasting relationships with many of your customers. So there’s an inherent level of fulfillment that comes along with it.
Following the tips mentioned here should prevent you from making some common mistakes, while at the same time accelerating your progress.
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