How to Start a Low-Cost Insurance Agency
Starting an independent insurance agency requires time, dedication, and an upfront investment. For most agents, it’s a calculated decision that they expect will pay off once they put in the hard work.
Maximizing your likelihood of success means making good business decisions and using your startup resources wisely.
As a company that has helped hundreds of independent agents launch successful agencies, Firefly has learned a few things about insurance startups. Most importantly, we’ve learned how to maximize your initial investment by partnering with the right agency network. Doing so gives you the support and carriers you need to grow your business. Let’s look at a few key lessons.
Agency Startup Costs: The One-Match Fire
You probably haven’t considered it this way, but building a successful agency is like being in a life-or-death situation where you need to start a fire – and you have only one precious match.
In this analogy, the match is your startup money. You can only use it once.
Just as someone lost in the wilderness hopes a single match will spark a roaring bonfire, every new agent hopes their startup investment will grow a thriving business.
- Whether you have a lot or only a little to invest upfront, it’s important to allocate your money wisely.
- One of the best uses for your funds is marketing your insurance agency to attract clients.
This is where Firefly can be an advantageous business partner. Our model minimizes your startup and monthly costs so that you can use your resources to market and build your “one-match agency.”
Firefly’s low-cost structure lets you use your cash to grow instead of drowning in fees that others charge.
What are Firefly’s Startup Costs and Fees?
Most aggregators and networks have a significant buy-in or franchise fee (we’ve seen amounts from $12,000 to $120,000). But fees like this can exhaust your resources right out the gate. If you spend that much money setting up, you have less money for marketing or sustaining your agency through the lean early years of agency growth.
With Firefly, you do not have a monthly fee. We don’t charge for carrier access or “just because we can.” Instead, Firefly has a modest upfront fee to cover the costs of getting you appointed and trained quickly. Our business is based on the premise that, if you’re successful, we’re successful.
We make our money through our commission split with you. This is why we encourage you to use your resources to grow, rather than giving it to us. The more policies you write and the more you grow, the more we both grow.
Three Costs of Starting an Insurance Agency
We’ve found that there are three crucial things every agent must have to be successful. As a Firefly agent, we require you to have:
- Errors and omissions insurance: E&O protects your business against legal claims resulting from mistakes, oversights, and errors.
- A comparative rater: You need to be able to easily compare quotes from multiple carriers to give your clients the best deals. We use EZLynx.
- A management system: Organize your accounts and track your prospects with a project management platform. EZLynx’s Advanced Package is part of Firefly’s amazing agency tech stack.
To help reduce your costs, Firefly has negotiated better rates for E&O and lower subscription amounts for EZLynx than you could get on your own.
Your exact cost depends on whether you already have qualifying E&O coverage that you want to keep and how many staff members you have (if any). You can get exact numbers by downloading our eBook.
Many aggregators charge you a monthly fee that does NOT include these tools. You pay money to them for “access” to them, or for administrative costs.
Firefly doesn’t make money on monthly fees. Instead, you get discounted prices for the tools listed above.
Firefly’s inclusive business model reduces your operating expenses instead of adding to them.
Start Your Agency Without Those Monthly Fees
Because Firefly makes no money on monthly fees, we’re looking for agents poised to grow. We want you to focus on the cost of managing your agency without worrying about monthly dues. To learn more about insurance agency startup costs, see our blog, “How Much Does it Cost to Start an Insurance Agency?”