How to Market Yourself as an Independent Insurance Agent
March 15, 2018
Show all

Captive Agents – Steps to Breaking Away

captive agent

To be an insurance agent, you have to have passion. While your job is to sell insurance, you have to believe in the product. It’s not enough to merely meet quotas; it’s about ensuring your customers are 100 percent happy with what you are offering and making sure they know you’re there for them if they have any questions or problems. It takes a particular type of person to be an insurance agent, and many people who become one are what are known as captive agents.

What is a Captive Agent?

A captive agent is someone who sells insurance for just one company. Their job is to make clients believe all their insurance needs can be met through one provider, and one provider alone. While many insurance agents love their work, they may also think they could grow themselves and their business by going it alone, providing their customers with a range of different insurance options through various companies.

However, learning to break away from being a captive agent, to becoming an independent agent, is a hard and long road. Find out below what steps you need to take to break away.

1. Consider Why You Want to Make the Move

Why are you not happy being a captive agent? What is it about the work that frustrates you, or has you reaching for the covers in the morning instead of leaping out of bed? Typically, captive agents can tire of being tied to one company, especially if they believe their customers are better suited to get insurance through another. They also seek higher commissions, freedom, and being able to truly provide their customers with a service that will benefit them without the looming gray cloud of meeting a quota.

Of course, you also need to consider the reasons to stay. Think about job security, not investing your own capital, and getting bonuses. However, can you really put a price on freedom? Becoming an independent insurance agent could be the best decision you ever make.

2. License Your Agency and Create a Business Entity

If you’re breaking away from the captive agent scene and plan on going it alone, you need to ensure your new business is licensed. If you’re going it alone as a sole proprietor, your own license may suffice. However, if you plan on hiring additional agents to work alongside you, additional licensing may be required.

Alongside your business licensing, you have to make sure your business is set up with your state secretary of state (if applicable) as well. Are you going to be a sole proprietor, in a partnership, or a corporation? What are the tax consequences of each choice? It may be helpful to review your new entity set-up with your accountant and/or lawyer.

To put yourself in an even better position, it’s also always a good idea to complete additional financial or business courses.

3. Make a Business Plan

A business plan when you’re looking to become an independent insurance agent is crucial. Without one, you may be left floundering with no direction, mission, or goals. When you sit down and decide to work out a business plan, the first thing you need to ask yourself is what you hope to achieve in five years’ time. If you hope to have an expanding client base and a vibrant network of people, you then need to discover how you’re going to get from where you are now, to that point.

What’s more, it’s ideal to also know how much capital you are going to need to throw into your venture, what you currently have, and what you can offer to your current and future clients. To break away from being a captive agent to becoming an independent insurance agent, you have to do a lot of strategic planning.

4. Get Insured

Whether you plan on providing personal insurance, business insurance, or the full package, you are going to need insurance for yourself, as well. Luckily, you’re the very person to get that sorted.  As an independent insurance agent, there are two recommended insurance options: Business Owner Policy insurance, and Errors and Omission insurance.

Business Owner Policy insurance will cover your equipment and any business property, while Errors and Omission insurance will come to your aid if you find yourself involved in a claim of negligence. While you’re in the business of insuring your clients, you too, need to be insured for any unexpected problems.

Being a captive agent is rewarding for those who are passionate about insurance, but if you’re ready to take a leap of faith and be your own boss, you need to be well prepared for what lies ahead. Take note of these four steps and start your journey to being an independent insurance agent on the right foot.

Leave a Reply

Your email address will not be published. Required fields are marked *