Those seeking a long-term, lucrative career that involves helping individuals and businesses flourish may find the insurance industry an attractive option. This field is well-suited to those with a dynamic personality and go-getter attitude but prefer flexibility over a nine-to-five job. Working as an independent insurance agent offers a unique career path where agents are responsible for their own earnings.
Since much of their earnings are commission-based, self-motivation and effective sales strategies are essential for success. Independent agents manage all aspects of the business – setting their schedule, seeking new clients, drafting insurance policies and maintaining relationships with existing clients.
The prospect of working as an independent insurance agent is not only attractive to those starting out. This is also a viable option for those seeking a change in their careers. Becoming an independent insurance agent is worth considering, especially if you have an established network of potential and existing clients.
So, is a career as an independent insurance agent worth it? Insurance Business seeks to provide answers to this and other important questions in this guide about how to become an independent insurance agent.
An independent insurance agent is one who carries insurance policies from multiple insurers.
In this manner, independent insurance agents provide consumers with a more competitive insurance environment by offering policies from multiple companies. This sort of flexibility also allows them to offer clients more favorable prices and terms.
As independent insurance agents aren’t obligated to a single insurer, they have the freedom to offer multiple types of insurance policies. They can offer life insurance, auto insurance, and personal lines insurance simultaneously, or they can specialize in one type of their choosing.
Those who wish to explore becoming an independent insurance agent will be pleased to discover that the educational requirements for this role are quite basic. The only strict educational requirement for aspiring independent insurance agents is to have a high school diploma or GED equivalent.
If you want to develop more skills and gain essential knowledge that can aid you in your independent insurance agent career, you can get a bachelor’s degree. Note that getting a degree is optional. The degrees that can be most helpful for independent insurance agents include:
Independent insurance agents offer a wide range of insurance to their clients and it’s also their duty to work with clients and evaluate their coverage options. Once they’ve made a thorough evaluation of what sort of coverage they need, the agent then recommends the most suitable insurance plans.
After they sell insurance policies to clients, they must maintain their relationships with their clients and the insurance companies they represent and get their insurance products from. The other responsibilities of independent insurance agents include:
Due to its relative ease of entry and high earning potential, becoming an independent insurance agent can be a viable career path. Although some US states can differ in their specific requirements for becoming an independent insurance agent, most of them follow a similar process.
Assuming first that you are starting out, here is a step-by-step guide on how to become an independent insurance agent. The general process for becoming an insurance agent, whether captive or independent, can be similar in some steps, but this is the typical process for becoming an independent insurance agent:
Knowing that as an independent insurance agent you can offer products from several insurance carriers, it’s important to choose first between commercial insurance and personal insurance. Agents who offer personal lines of insurance focus on coverage for families and individuals, and can include auto insurance, life insurance, and home insurance.
Commercial insurance, meanwhile, is coverage for businesses. This type of coverage includes general liability insurance, errors and omissions, and commercial property insurance.
When choosing which type of insurance you want to sell, it’s important to consider what you’re comfortable offering and your educational background.
Based on the insurance you decide to offer, check with the licensing requirements in the state you reside in. Although some parts of the licensing process can be common with most states, some states have different requirements.
For instance, some states will require that you take prelicensing courses with a minimum of 20 hours. Others may require in-person classes. Also, make sure you are eligible to take a licensing exam and apply for the insurance license.
After completing the prelicensing courses, you can then schedule your insurance license exam. You will have to pass the licensing exam to get to the next step of the process. The usual passing grade is 70% in most states.
After you’ve passed the licensing exams, you can send in your application to the state licensing department. At this point, you must also submit yourself to a background check and turn in the necessary documents. Once your application is approved and you pass the background check, you can then get your license and begin working as an independent insurance agent.
This step-by-step guide on how to get an insurance agent license can help you as you start your insurance career.
You will then have to apply with insurance companies to carry their products. Only once you’ve been granted an appointment and binding authority is when you will be allowed to sell their insurance products.
When you are licensed and have signed up with insurance companies to sell their products, you can start finding your own clients, or what’s known as building your book.
Step 7. Get your own insurance
Even you will need insurance. There are at least three types of insurance you will need for yourself and your insurance practice. These include:
In case you are an established insurance professional and want to strike out on your own as an independent practitioner or set up your own agency, what is the process?
Step 1. Assess your business idea
It's important to first identify the insurance niche that you plan to fill in your state. Remember, you’ll be competing against many other independent insurance agencies and agents, and perhaps even your former employer. You will need to find a way to make your services or products stand out in the market.
Make an honest evaluation of your strengths, weaknesses, and your insurance expertise to pinpoint your niche or specialization.
Having a well-written business plan can help you with your independent insurance practice. Make sure to flesh out these sections of your business plan:
Before you register as a business, decide on the sort of business structure you want for your independent insurance practice. You can set up either of the following:
After you’ve decided on what type of business to operate, register your business name with the relevant state authorities. Note that if you choose a sole proprietorship, you may need to create a "Doing Business As" (DBA) name.
Before you begin operations, you must secure these licenses in your state:
Find out what insurance agency licenses you need to start your own business in this guide.
Now that you’ve secured the necessary licenses and registered your business, make sure to have a business bank account that’s separate from your personal one. Doing this will spare you a lot of headaches down the road, as a business bank account helps you maintain limited liability protection.
A separate bank account for your business will also greatly simplify your tax filings.
Step 7. Purchase the necessary insurance
To safeguard yourself and your business from various claims that may arise as you operate your business, it’s important to get the necessary insurance. This includes E&O insurance, general liability insurance, and commercial property insurance.
To attract clients, you can employ a mix of different marketing strategies like:
To help you market yourself and your practice to potential clients, make them realize the benefits of working with an independent insurance agent. You can get some insights from this video that highlights the advantages your clients can derive from getting insurance from and independent agent like yourself:
Once you’ve got your licenses, prepare the necessary paperwork and apply at different insurance carriers. Be prepared to show them your marketing plans and your appropriate credentials as proof of your capabilities.
Start marketing your agency and actively seek as many clients as you can. Focus on delivering excellent customer service and build your relationships with insurance companies and clients – don't forget that referrals are a potent source of new business.
Following these steps can be invaluable for those who want to know how to become an independent insurance agent, whether they’re getting their feet wet as a fresh graduate or as a seasoned professional shifting to an entrepreneurial role.
Becoming an independent insurance agent can be worthwhile if you want independence, have strong sales and interpersonal skills, and are willing to navigate the challenges and risks of being self-employed. The opportunity to earn a lot of money and have a long and fulfilling career is possible as an independent agent, but you must be prepared to invest a lot of effort and dedication.
Did you find this guide on how to become an independent insurance agent helpful? Let us know in the comments.
