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Wednesday, 04/16/2014email print

MEMBER RESOURCES / AGENCY BUSINESS RESOURCES_________________________________________________________
START AN AGENCY

IIAV is an organization devoted on promoting, enhancing, serving and assisting independent insurance agents.


 

So you are thinking of starting an independent insurance agency?  This is a major consideration and we at the Independent Insurance Agents of Virginia share your excitement and applaud your initiative.  The information that follows is meant to provide many guidelines and points of interest as you begin planning.  Please understand that we want to help.  At some point contacting us directly, coming into our offices for a visit and/or discussing your ideas with others in the agency business are strongly urged.
 
This toolkit is designed to educate and assist in the process of starting an independent agency, but it is up to you to make it happen. Building an agency from scratch is possible.  Many accomplish this annually in Virginia. If you're successful, the rewards are considerable, including the ability to call your own shots, a healthy return on investment in the form of owner’s equity and the satisfaction of being in a business that protects people and their valuables. On the other hand, starting an agency from scratch is challenging . . . and requires plenty of hard work.

 
 

Questions & Answers:
(Below are some of the most frequently asked questions from those considering starting an independent insurance agency.)

Do I have to create a corporation or entity or I can simply be a sole proprietor?  Consult your legal and tax professional first.  However, you may begin as either a sole proprietor or you may establish a legal entity.  In recent years, most new agencies appear to be set up as LLC’s.

How long does it typically take to open an agency?  After you’ve taken the time to develop a serious and well-thought-out budget and business plan, the areas of establishing an agency that seems to take the longest are obtaining agency appointments and obtaining E&O insurance.  Allow several weeks at the least.

How much does it cost to begin selling insurance?  This varies greatly.  For some forms of insurance you may begin selling almost immediately upon receiving your license from the Bureau of Insurance.  But for most agencies, becoming established fully requires an initial investment including licensing, agency management systems, computers, office space, E&O and other business insurance, marketing and advertising, payroll guarantees and more.  This can run into the tens of thousands of dollars BEFORE agency income is realized.  Develop a serious budget very carefully.

When my agency is up and running can I use independent contractors to sell or do they have to be employees?  You may engage non-employees as 1099 contractors to sell.  This adds some exposure to your agency so please be careful.  Check with your E&O carrier and have your agreements in writing.

Can I run my agency out of my house?  Technically, yes.  Many agencies begin this way.  However, before establishing your business plan for your agency check with carriers you plan on representing.  Many will NOT appoint you with a “retail” office.

Do I need to get a local business license?  No.

Do I have to take a class to get my license?  No.  The Bureau of Insurance does not require any initial classroom time.  But it is highly recommended. 

Are there classes available to get my license?  Yes.  IIAV offers pre-licensing classes for P&C, Life and Health licenses.  Check the Education tab on the IIAV home page.

Are there classes available on how to start an agency?  Webinars are being considered now.  Check with the Education tab on the IIAV home page or contact Danny Mitchell at dmitchell@iiav.com.
 


 
Donegal Agency Builder
 
The potential financial benefits of owning your own business are outstanding and the Agency Builder Program gets your started to the road to financial indpendence.

Download the the program (Adobe Reader required)
 

 
Critical success factors necessary to make it:

  • Capital – While an independent agency is not capital intensive relative to other industries, you can expect to need approximately $20,000 to $50,000 in start-up capital to pay for things such as office space, management software, fees, equipment and furniture, E&O insurance and marketing; and that doesn’t count resources necessary to live on while you build your customer base.  Many have started with far less, however.
  • Access to insurance companies – You can get licensed but you can't sell insurance without access to insurance companies (carriers) and managing general agents. For property and casualty insurance, most companies are looking for a long-term relationship. Getting an appointment usually requires, among other things, experience in the business, a track record of successful marketing and selling, a marketing territory geographically desirable to the companies and a solid proposed business model.  You will find most carriers insist on at least a few years of experience before entertaining appointments.  Many also require detailed financial information and a solid written business plan before consideration.
  • Good sales and administrative skills – Some people have great selling skills and can make great insurance producers. Other people are terrific administrator and service-minded. Starting an agency from scratch will require both sets of skills until you get large enough to hire others.
  • Thorough technical expertise – Customers are placing their risk management needs in your hands, therefore you need to understand the products you're selling. Depending on the lines of business you intend to offer, there are scores of different policy forms and coverage implications. Add to that the importance of understanding the risk management process itself, and you have a very knowledge-intensive profession.

If you're still interested --- and we hope you are --- this toolkit will walk you through the steps necessary to get started and provide resources to help you implement the steps where possible.
 



Free Counseling and Mentoring to Start Your Own Agency
Whether you are just starting a business or expanding an established business, SCORE counselors are here to help you succeed. Sign up for an appointment to meet with a business counselor to develop your business plan, discuss a new idea or tackle a business problem. There is no charge for counseling, no matter how many sessions are needed. Counseling is available to all U.S. citizens over the age of 13. The SCORE Association, is a nonprofit association dedicated to entrepreneurial education and the formation, growth and success of small businesses nationwide. SCORE is composed of 10,500 volunteer business mentors, both working and retired, who counsel businesses.

Click on the link for the SCORE Chapter closest to you and get started today….


Bristol www.bristolscore.org
Charlottesville www.score-494.org
Hampton www.score100-virginia.org
Lynchburg www.lynchburgscore.org

Martinsville www.martinsvillescore.com
Norfolk www.scorehr.org
Richmond www.richmondscore.org
Roanoke www.roanokeva.scorechapter.org

Washington D.C. www.scoredc.org

Waynesboro www.scorevavalley.org

Williamsburg www.williamsburgcc.com


Recommended Books:
  • So You Want to be an Insurance Agent by Jeff Hastings - 213 pages for $24.95
Want to create and operate a successful multi-line insurance agency?  Hastings delivers, step-by-step, what he believes is the most effective method for the cultivation of a top-performing insurance practice.  The text covers everything from general business practice to state licensing requirements.
 
Other Helpful Links:
 

AGENCY START-UP CHECKLIST

LICENSING INFORMATION

E&O COVERAGE FOR YOUR AGENCY

SMALL BUSINESS ADMINISTRATION
•  Start-Up Basics
•  Writing a Business Plan
•  Financing
•  Tax Information

APPLY FOR IIAV MEMBERSHIP FOR OTHER BENEFITS & SERVICES

READY VIRGINIA - HURRICANE PREPAREDNESS
•  Protect your loved ones in an emergency

COMPANIES THAT ARE WILLING TO WORK WITH NEWER,
START-UP AND/OR SMALLER AGENCIES

MINORITY BUSINESS DEVELOPMENT AGENCY
•  New Business Checklist
•  Loans & Grants

INSURANCE COVERAGE FOR YOUR AGENCY & CLIENTS

TRAINING ISSUES FOR YOUR STAFF

AGENCY TEAM BUILDING

BUSINESS REGISTRATION GUIDE
Step-by-step instructions on registering to conduct business in Virginia.

 

    


Independent Insurance Agents & Brokers of America, Inc.
e-mail: info@iiaba.org

127 South Peyton Street • Alexandria, VA 22314
(800) 221-7917 • (703) 683-7556 (fax)

 

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