Starting an independent agency can seem like a daunting task without a roadmap to guide you. Big I Maryland is here to help you on your journey to independence!
STEP 1: The Groundwork
Establish a realistic timeline
Obtain qualified legal advice
Get an overview of the Independent Agency System
STEP 2: Create a Business Plan
Just about every industry relationship will require a formal business plan. This includes carrier prospects for appointments and E&O insurance providers. The business plan consists of a narrative, resumes, and several financial worksheets.
The five things every business plan should address are:
The Business Environment
STEP 3: Meet the Legal Criteria
Choose An Entity
Register with the County or State
Obtain IRS ID
Apply For E&O Insurance
Since this is a new independent agency, and professional liability policies are on claims-made policy forms, your new E&O policy will have a retroactive date of the policy inception. In addition, since your agency is new and there is no previous information to reference, the E&O carriers will essentially have to underwrite you, as the owner, and your goals for the agency. E&O carriers will require a business plan and resume with all new applications. Insurance Brokers Service Corporation, Big I MD’s for-profit insurance agency, is part of a national purchasing group providing E&O coverage to members through SwissRe/Westport and also part of a national program for Fireman’s Fund. For this reason, Big I MD membership is required before your E&O application can be processed.
STEP 4: Secure Market Commitments
Direct appointments with a variety of established carriers that have broad, competitive insurance products to offer is the ideal situation; however, they are very hard to come by unless you have at least a three-year track record and a good size book of business that you will bring to the table right off the bat. For most start-ups, market commitments will have to come from a combination of a few possible direct appointments and/or a variety of indirect markets such as wholesalers, managing general agencies, and market aggregators.
Big I Markets/MGA's/Wholesalers
What does it take to get a company appointment these days? Companies don't usually come looking for you, so you should approach company marketing departments in a way that will enhance your chance for a successful conclusion.
STEP 5: Secure An Agency Management System
A fundamental building block for today's successful independent insurance agency is a good agency management system that can provide a framework for all the necessary business processes. The most effective independent agencies have maximized the ability to operate as digitally as possible, minimizing double entry and moving paper. Agency management software can range in cost from less than $1,000 to $5,000 for a start-up operation with monthly fees of $60 to $600, depending on the level of sophistication you desire. It is advised that a new agency should not skimp on agency management software since it will pay in the long run to operate as electronically as possible. When you join Big I Maryland, you also become a member of the Independent Agents & Brokers of America (IIABA). IIABA sponsors an organization made up of independent agencies, carriers and technology vendors called the Agents Council on Technology. The ACT website has numerous resources to help agencies harness technology to maximize productivity and profitability.
STEP 6: Brand Your Agency
Develop A Website
STEP 7: Continuing Education & Training
Depending on your level of industry experience or your level of expertise in the various lines of business you intend to offer, Big I Maryland offers a broad array of training resources to fit your needs.
STEP 8: Recruit The Right Staff
Whether you need staff right off the bat or down the road, recruiting the right talent for the right roles is not easy, especially if you're doing everything in the agency yourself. Big I Maryland has the resources you need to help you find, hire, assess, and engage your team.
STEP 9: Build Relationships
Big I Maryland offers a number of events throughout the year that help our members build relationships with mentors, carriers, and other Associate Partners. You can also get involved within the Association by joining one of our committees.
STEP 10: Join Big I Maryland
We can help connect you with a community of insurance professionals and a suite of top-tier products and services that will allow you to focus on what is important – your agency.
Here are some of the many resources we offer to help independent agencies: