One business option that seems to be overlooked these days is starting an insurance agency. It seems that the idea is intimidating for most people which make them look at other startup options. However, just like any other business, starting from scratch poses different challenges.
Two Types of Insurance Agencies
If you are looking to open a specialty insurance agency, you’ll have to choose between starting and independent or a captive insurance firm? Both companies have their own advantages and disadvantages and are also equally profitable. Choosing the right insurance agency type would depend on your goal or business focus.
Independent Agency
If you want to have the flexibility and freedom to sell multiple insurance products from different insurance companues, then you would fit the Independent Agency type. Basically, you will act as the pre-underwriter. You have to assess each client and see what type of insurance policy would fit them. There is no one-size-fits-all insurance policy for everyone so every client would need an insurance policy that is customized to their needs and budget.
Insurance policies would vary from one carrier to another so it would be your job to let your clients check out their iptions by explaining the edge and differences of one insurance policy from another. This is beneficial to you as owner of an insurance agency and to your clientele because you are able to provide them a wide range of options to choose from.
Captive Agency
There is an exclusivity clause that transpires one insurance carrier and an insurance agency. This means the agency would sign an exclusive contract to represent and underwrite insurance specifically for one carrier. You are able to offer different types of insurance policies such as personal, health, business, annuities, and life which offers you an opportunity to build a continuous and long-term relationship with your clients. This allows both clients and agents to build trust and rapport as you become a crucial part of financial planning for your assets.
Can You Make Profit from Owning an Insurance Agency?
Even though it’s a silent industry, the insurance industry has been growing over the years with approximately 22% recorded growth which is comparaby higher by 10% than other industries. It’s like a sleeping giant but is full of potential in terms of sustainability and profitability.
Building a business would often start slow and build up in momentum over the years. This happens with any industry and is remarkable with the insurance industry. People are always looking to protect and grow their assets or money and properties so owning an insurance agency is like hitting the jackpot.
However, your profits would largely depend on the insurance carriers that you would decide to tie up with and the policy types you would want to focus on. Insurance agents are considerably one of the high-earners especially for commercial or business insurance policies. Aside from their regular pay, they would also receive commisions and bonuses.
How to Make an Insurance Agency Profitable?
Insurance Agency CEOs would tell you to hire the best people in the industry of IT, Accounting, and Marketing. You can also outsource but you would have more control if you hire people full-time. You also have the option to buy another agency’s book of business and adopt multiple lines so you can promote and sell more insurance carriers under one roof.
When looking at your option for insurance carriers, you must be picky and select trusted and reputable insurance companies that you would be more than willing to write for yourself and your family. If you have the option, then allowing your staff to work from home will also cut down your overhead costs and also build trust, independence, reliability, and teamwork with your employees.