Unlike Mr. Owl, we are not here to trick you for our own benefit. You asked how many ways there are to start an independent agency, we’ll tell you as honestly as we can.
We want you to understand all of your options. Once you do, we think you’ll see that working with an agency like ours has a lot of advantages when compared to going independent some other way.
So, how many ways are there to start an independent insurance agency? Here are 5 approaches you could take:
1. Buy an existing independent book of business
Acquiring an existing book gets you instant access to carriers the agency has.
One drawback of buying a book is the difficulty of finding a good agency for sale. There aren’t many out there. If you do manage to find a decent one, you may end up overpaying to get the book in the first place, because you’re competing with big agencies who are willing to pay even more for it. Or sometimes the seller isn’t willing to come to a reasonable price.
Buying a book also requires finding the money to fund the purchase. There’s also a higher risk in this method since the clients you just purchased might not stick around. You also have to meet the carrier’s production requirements to keep them around.
2. Work as an independent producer for a big agency
This should get you access to a good selection of carriers, and you won’t have to worry about production requirements. However, you have no equity in the business as an independent producer. Unfortunately, most producers in large agencies get a very low commission split. Renewal commissions are particularly low.
Worth noting, many great Firefly agents were producers for either a captive or independent agent. Below, Justin explains why his status as a producer motivated him to look for a change.
3. Start an agency from scratch
While possible to do, this method is difficult. Getting carrier appointments can be complicated, and you’ll usually have to start with non-standard carriers because they are typically more willing to appoint agents without a track record.
Each carrier’s production requirements are demanding—even overwhelming at times—and will limit the number of carriers you can keep satisfied. You probably won’t have as many carriers as you’d like.
On the plus side, you won’t split your commissions with anyone.
4. Work with a network or cluster
You’ll certainly get more carriers with a cluster than you can by yourself, and you can even use a cluster to supplement the carriers you already have, on your own. Working with a cluster also gets you access to—but not binding authority with—carriers with whom you do not actually get appointed.
Some agents like the idea of working with a cluster because they see it as a launching pad for their agency. You can work with the cluster until you’ve grown big enough to buy yourself out and venture out on your own.
While clusters can be a good starting point for some agents, they may still have burdensome production requirements. You’ll be required to split your commissions with the cluster, and it could be difficult to leave the contract.
If you sell your book of business to someone else, the cluster will often have a right to a portion of the proceeds of your sale.
5. Work with Firefly
Working with Firefly has enabled many agents enjoy the success and satisfaction in starting an independent insurance agency. Firefly has no per-carrier production requirements, gets you direct appointments and binding authority with more carriers than anywhere else, and provides customized training to help you get started. It’s also easy to leave if you find it’s not for you.
This has been an overview of different ways you could start an independent agency. If you’d like to know more about the process of starting an independent office, please continue reading other articles in our blog or FAQ.