How to get Appointed as a New P&C Insurance Agent
Getting appointed with insurance companies as a new agent isn't always easy. While this is just one of the many obstacles that new independent agents face, it's a big feat to overcome. Although it may seem impossible, you can successfully gain carrier appointments as long as you do plenty of research and follow the necessary steps. However, don't be fooled by the misconception that becoming an independent agent is just a matter of acquiring your own office and getting carrier appointments. There are several other things for an independent agent to consider before one can even begin to seek carriers to represent.
However, despite the hurdles to overcome, most independent agents feel like the trade-off is worth it since the two classifications of agent seem to have opposite courses. While it's easier to become an exclusive agent, writing business gets more difficult over time as company restrictions tighten. For independent agents, the opposite is true. It can be a long, hard road to get the freedom of being an independent agent and receive company appointments, but once the business has had a couple of years to level off, things tend to get easier.
Increasing Your Chances of Getting Appointments
Some people want to begin their career in the insurance industry as independent agents and skip the phase of working as a captive agent altogether. While this sounds great in theory, the agents that go this route tend to find that it is actually more difficult than the alternative. It's similar to the situation that many college graduates face when they try to enter the job market after graduation: they can't get hired without experience, but can't get experience without a job.
Insurance companies tend to give preference to agents with prior experience in the field when it comes to granting appointments. Unfortunately, many new agents don't find this out until it's too late. With that said, if you are in the process of getting licensed to become a property and casualty insurance agent and think you want to be non-captive, it's a good idea to work exclusively under a single insurer before you go out on your own. Not only will you be able to get a chance to develop necessary business relationships, you may also have the option of buying out your book of business after a certain period of time to help jump-start your independent agency.
For agents who have gone the captive route and are now beginning their career as an independent, it's a good idea to build your book of business as much as possible before seeking new carrier appointments. Insurers want to see that you're successful, driven, and capable of making lots of money for them. Having a large book of business with your existing carrier appointments will help get this message across.
You may be tempted to request appointments with any and every company you can think of, in hopes that you'll be accepted by several. Before you do this, you should sit down and consider your current goals and plans for the future of your agency. Make out a business plan and include as many details as possible. Insurers prefer to work with independent agents who have a clear vision of the future and can offer them some degree of predictability. Blindly sending appointment requests to dozens of companies without a clear business plan can send the message that you are shortsighted or impulsive. Since you won't be held to the same level of standards as their exclusive agents, insurance companies need to know that you are reliable and trustworthy.
One way to show potential insurers that you would be a good candidate to sell their products is to let them know that you aren't applying to work with any of their major competitors. Choosing a niche market can help you with this since not all companies offer the same products. For example, applying to sell non-standard auto insurance is usually a great starting point for new independent agents. Since many major insurers won't write this type of policy, it gives you a big advantage in the market. By doing this, you will be able to accomplish what an exclusive agent can't do for the company like re-write a non-standard auto policy to a standard policy. Knowing you can help them get their foot in the door with customers who otherwise might not consider them as an insurer is a huge advantage.
Where to Find Insurers for Appointments
While major insurance companies do send out recruiters to start new agencies, they are looking for people to work as captive agents, not independent ones. So be prepared to do a lot of legwork since you'll be the one pursuing the insurers, not the other way around. This is one of the biggest reasons why it's good to buy out your book of business after working as a captive agent instead of starting from nothing. If you have a small portfolio of customers to start with, at least you'll have something to work on growing until you receive appointments from other companies.
Since approaching major carriers directly can take quite a bit of time, you may be interested in seeking other methods of obtaining carrier associations. Fortunately, there are a few ways to do this. Essentially, you have three options. Your first option is to become a franchisee. While you won't have the freedom that comes with being a truly independent agent, it's a good compromise. You will probably have to make monthly payments to be part of the company and adhere to franchise rules, but you will have a large support network as well as access to more marketing materials and a bigger pool of carriers than an aggregator can provide.
If becoming a franchisee isn't right for your agency, you could also work with an MGA or a cluster. The latter option is very popular with new independent agents and many find it to be extremely helpful in getting their agencies off the ground. However, before you join an MGA or cluster, you may want to begin pursuing carriers directly.
Networking Can Help You Get Further
First, start networking with the carrier representatives. Although the rep won't necessarily have the final say in whether or not you'll get the appointment, you'll have a much better chance of getting one if you impress him or her. Also keep an eye out for carrier reps at any conventions, training sessions, or continuing education classes you may attend. Be sure to ask what their carriers are looking for and let them know what you have to offer. Even if you aren't a good match for a particular company, keep in touch with their rep in case you fit their needs later on down the road.
You can also try looking on LinkedIn for individuals to approach for appointments. If you have already spoken to carrier reps and recruiters, they may be able to steer you in the right direction on who can help you get appointments. Remember to be friendly and not pushy. Chances are, you aren't the only one contacting them in hopes of getting an appointment.
Many new independent agents get their start with Managing General Agencies-- also known as MGAs. You may be interested in going this route, as well. What is an MGA? A Managing General agent is an insurance broker who has been granted underwriting privileges by an insurer. As such, an MGA is capable of performing certain tasks that are normally handled by the insurer. This can include functions such as binding policies, pricing, underwriting, and settling claims.
MGA appointments are often fairly easy to obtain since they normally work with unusual lines of insurance, such as surplus lines and professional liability. However, an MGA appointment can help you build your book as you wait for appointments from other carriers. One of the biggest benefits of working through an MGA is that the resulting carrier relationships will increase your agency's appeal to the companies you request appointments from.
Working With Aggregators and Clusters
If you don't feel that an MGA is a good fit for your agency, consider joining an aggregator or cluster. For many new independent agents, this is the most effective method for getting appointments. In fact, Channel Harvest Research reports that twenty-six percent of independent agents work with an aggregator or cluster.
So, what is an aggregator or cluster? To put it simply, this is a group of agents or brokers who form an association or joint venture. By doing so, they are able to market and place the individual agencies books of business as a portion of a larger book. Be forewarned: this is an extremely time consuming process as you will need to do a lot of research before you make a decision on which cluster to join. Furthermore, once you make a decision, it may be impossible to change. However, an aggregator will grant you access to multiple insurers, including some large companies.
Here are a few of the major clusters to consider joining:
- Iroquois Group
With this group, you won't be given a mentor to help you along. Depending on your level of independence, this may or may not be a positive aspect for you. However, unlike some other clusters, Iroquois does offer an escape clause that will let you roll your book of business out after you have written a certain amount of production.
- ISU Group
If your agency isn't brand new, but you're looking to increase your number of carrier associations, ISU could be a good fit for you. Many agents like ISU because there are no volume quotas, commissions are paid at one hundred percent, and they offer direct access to all of the highly sought-after carriers.
Like ISU, MSI offers direct carrier access. Unlike Iroquois, this cluster will give you a mentor to help make your transition easier. You also have the option of owning a defined zone so there will be no worries about other agents encroaching on your territory.
Unlike other clusters that prefer existing agencies, SIAA will happily take on agencies of any size. However, there may be substantial fees to join.
Things to Consider When Considering Joining a Cluster
Since each cluster differs from the others, be sure to ask a lot of questions before you make any commitments. Use this guide to help you determine if a particular cluster is right for your agency.
- Does this group have national appointments with access to major carriers? If so, which carriers are immediately available?
- Is this group reputable and verified?
- What is the cost to join? Is there a buy-in amount or will I have reduced commissions?
- Are there other benefits to join such as discounts, agent support, or vendor affiliations?
- Will I retain ownership of my book of business or will I have to buy it out if I choose to end my contract?
- Are commissions paid out at one hundred percent or less?
- Will my agency have direct access to carriers?
- What does the exit clause look like? Is there a non-compete agreement?
- Does this cluster give me binding authority?
Applying Directly to Carriers
Although an arduous process, direct applications to carriers can absolutely pay off if you get approved. If you're already working with an MGA or cluster, make sure that will not conflict with your appointment request. Then as you begin, consider these steps to help you with the process:
- Be sure to research each carrier thoroughly before applying. Look at their online reviews and determine whether or not your agency would be compatible.
- Review all carrier requirements and make sure that you qualify before applying. Also be prepared to submit additional requirements such as a background check and licensing verification for yourself and your agency.
- Research each carrier's A.M. Best Rating to find out how often they take on new agencies and whether or not you'll have to make a minimum premium volume commitment.
- Be patient throughout the process as it can take months to receive approval.
How Long Does Each Process Take?
Of course you're going to be eager to start writing business when you open the doors of your new agency. So what is the fastest route to doing that? The quickest option to start writing policies is going to be joining an MGA. Since not all MGA's give agents binding authority, and they are easier to leave, they are also easier to join.
The next fastest choice is to join a cluster. Unlike an MGA, which can be joined or left with relative ease, clusters take a bit longer to join due to the research that you should perform before applying. While it may take longer to receive approval from a cluster, you should hear something back in a matter of weeks, not months.
Finally, the process that takes the longest to reach approval is applying to carriers directly. Not only will your applications be longer, more in-depth, and possibly more restricting than the aforementioned options, but it will also take much longer to get a response. Many independent agents report that it may take between three and six months to get approval when applying directly for carrier appointments.
For many, working as an independent agent is the only way they're willing to enter the field of insurance. There are numerous hurdles to overcome if you're trying to break into this field, but it isn't impossible. With a lot of research, patience, and motivation, there's no reason you can't become a successful independent agent, too. Always plan ahead and thoroughly research each and every decision you need to make. Although it may take some time to get the appointments you want, with the correct course of action, you're sure to be successful.