Independent insurance agents help clients find the perfect policy to fit their needs while enjoying the flexibility and earning potential that comes from being self-employed. Does this sound like a career that fits you? It just takes a little determination and drive, and you’ll be well on your way to a successful career as an independent insurance agent.
Before you jump into this exciting career field, here are a few things to know and some tips to help you get started.
what is an independent insurance agent?
There are two basic types of insurance agents: captive and independent. Captive agents only sell policies for one insurance company, but independent agents, also known as insurance brokers, can contract with multiple companies and sell policies for all of them.
Because independent agents are not tied to a single carrier, they can be more competitive in their sales approach. If a specific auto policy from one company doesn’t fit a prospect’s needs, for example, the agent may offer other options and rates from different companies. Independent agents also benefit from having a lot of flexibility: they can specialize in one type of coverage or offer several. they can start with a single line of coverage and gradually add more as they expand their network and grow their business.
Not all insurance companies will work with independent agents, but there are quite a few that do. As an independent agent, you won’t be short of policy options to sell.
what does an independent insurance agent do?
In many ways, the job of an independent agent is similar to the job of a captive agent. They search for leads, make sales calls, build relationships with leads and customers, and sell policies. however, because they don’t sell for just one company, independent agents spend more time researching and comparing policy options for their current and potential clients.
For example, let’s say you meet a new potential customer looking for life insurance. After thoroughly reviewing your needs with detailed questions, I would go back to your portfolio of companies and policies to find some options to offer. You may come back with three policies, each from a different company, to present to your prospect. this allows you more freedom to design the right policy for your clients.
As an independent agent, you will typically also work as an independent contractor. That means you’ll typically need to run a business rather than just work for an employer. That includes marketing your business, handling administrative tasks, managing finances, and taking care of your self-employment taxes. This carries more responsibility than working for a single insurance company, but it also gives you more opportunities.
How much do independent insurance agents make?
Insurance agent compensation can vary widely by region and performance. however, independent agents generally earn better commissions than captive agents because the insurance company does not have to handle the overhead of employing them. Generally speaking, your salary cap is better as an independent agent.
That said, you’ll need to factor in the costs of running your own business. You’ll pay self-employment taxes for Social Security and Medicare, which are double the rate you’d pay as an employee. You’ll also have other overhead costs, which can include renting an office or paying for home office expenses, hiring staff, marketing, and more.
how to become an independent insurance agent
If running your own business and selling insurance sounds like a good combination for you, then a career as an independent agent might be a good fit. if that describes you, here are nine steps to help you get on your way.
1. receive the required education
At a minimum, you will need a high school diploma or ged to become an independent insurance agency. A college education could help him advance, especially if he earns a degree in a field like marketing, finance, or business administration. The skills he learns in courses like these will prepare him to run his own business as an insurance agent.
You’ll also need to study for your state’s specific licensing exams, which we’ll cover in the next section.
2. get your insurance license
To sell insurance, you will need a producer’s license. A producer is a term that refers to anyone who sells insurance products. Obtaining an insurance license will allow you to discuss insurance products knowledgeably with clients and help you close the sale.
Each state has its own insurance licensing requirements, so specific stipulations will vary based on your location. Also, the type of license or licenses you will need will depend on the types of insurance products you decide to sell. The two most common types of insurance licenses are property and casualty (P&C) and life, health and casualty.
property and casualty license
A property and casualty insurance license allows you to sell property and casualty insurance consisting of auto, homeowners, workers’ compensation, business property and business liability insurance. You will attend a pre-licensing course either online or in a classroom and pass a licensing exam. Next, you’ll take a licensing exam and apply to your state insurance department for a license.
life, health and accident leave
Obtaining your life, health and accident license will allow you to sell insurance products related to life events, including life, accident and health insurance. As with the property and casualty license, you will need to take a pre-licensing course, pass the exam, and apply to your state insurance department for a license.
Here’s a helpful resource for insurance producer licensing requirements for all 50 states.
3. decide on the types of insurance products
You can also choose to sell personal and business insurance or focus only on one or the other. Personal insurance includes your auto, home, life, disability, health insurance, etc. Commercial insurance consists of insurance for businesses, such as commercial property, general liability, commercial auto, business interruption, workers’ compensation insurance, and more.
There is no wrong answer. You just need to develop a business plan for your agency and decide what your areas of expertise are or if you want to provide comprehensive insurance services to individuals, families and businesses. think about the time, money and resources you will need to plan and invest to get your agency off the ground and what type of agency (personal lines, business lines or both) makes the most sense for you and the people in the area you work in . I will serve you.
4. safe appointments with the insurance company
As an independent insurance agent, you’ll need agency appointments with insurance companies that sell the types of insurance products you want to offer your clients. The appointment gives you, as agent, the authority to act on behalf of the insurance company.
If you’re a new insurance agent, the best practice is to book appointments with established companies that offer multiple lines of coverage and have attractive commissions and opportunities for you to grow as an agent. then, as you get established, you can add niche operators that specialize in your target markets, whether that be clubs and restaurants or churches and civic organizations, just to name a few examples.
If you’re interested in becoming an independent agent for a specific carrier, you’ll likely find information on how to become an agent on the carrier’s website. for example, there may be an application to fill out or a number to call for more details.
Before appointing you as an agent for the company, insurance companies will look at whether there is a match between the products you sell and the target market you serve as an agent. The carrier will also consider several other factors, including your agency’s financial stability, business plan, level of automation, and appointment history with the carrier.
There are also a few things that you, as an agent, should keep in mind when looking for agency appointments. for example, is the company appointing new agencies? Will you be able to meet their premium quota? Is the insurance company financially sound? You can also check out company ratings through organizations like AM Best (for financial stability) and J.D. power (for customer service ratings).
5. market yourself
As we mentioned, marketing is a key part of your job as an independent agent. If you don’t put in the effort, you’ll have a hard time selling enough policies to build a sustainable business.
There are countless ways to promote yourself and your services. it all starts with your target market and you can build from there. For example, if you sell term life insurance, you will have a substantially younger customer base than if you sell Medicare. In the first instance, you can focus your marketing efforts more on social media and other digital channels. in the latter case, you could rely on more traditional methods or word of mouth marketing.
An effective marketing plan should incorporate multiple strategies, from mailings to email and more. this should be an important budget line for your business as an independent insurance agent so you can connect with as many prospects as possible.
6. continue your education
The insurance industry is constantly evolving and independent agents need to work hard to keep up. new regulatory requirements and legislation may affect your policy offerings. If you’re not prepared to answer questions or speak knowledgeably about industry developments, you could lose a sale or lose a customer. most states also have continuing education requirements to maintain your license.
The good news is that there are plenty of opportunities to stay up-to-date on what’s happening in the insurance industry. Online courses, seminars, and industry events can help you meet your continuing education requirements and stay informed.
7. help protect your investment
When you establish an insurance agency, you must ensure that it is properly protected. You sell insurance for a living, but you also need to buy insurance to help protect your investment. Some types of business insurance you may need to purchase include general liability insurance, commercial property insurance, errors and omissions insurance (commonly known as toilet&o coverage, which protects you against mistakes you or a member of your staff may make ), and workers’ compensation insurance.
8. maintain agency compliance
Insurance agents and other financial services are governed by regulatory agencies, such as state departments of insurance and the Financial Industry Regulatory Authority, Inc. (finara). finrah has particular jurisdiction over investment professionals and companies that sell variable life and variable universal life insurance.
As an insurance agent, it is your responsibility to maintain all of your state resident and nonresident licenses and appointments with your insurance companies. If you forget to renew any of your licenses on time, you may have to pay a fee to reinstate them.
9. find and keep customers
Once you have your feet firmly on the ground as an insurance agent, you’ll need insurance contacts to generate new business. Sure, you can reach out to family and friends and offer them insurance, but ultimately, you’ll need a way to find new customers.
assurance offers you personalized training and pre-qualified leads who are eager to talk with you about finding the insurance coverage that’s right for them. learn more about joining the guarantee today.
once you’re ready to start your own insurance business, nectar connects you with customers who have a verified interest in purchasing your insurance products through real-time leads or live call transfers.