A number of details should be considered when forming an agency or when going “independent” from a captive carrier environment. These items need be considered when also buying an existing agency.
You should always consult with appropriate professionals such as attorneys, accountants and tax professionals for your particular individual agency needs and legal structure.
- Develop a business or marketing plan with short, intermediate and long term goals including a succession plan. Determine your geographic focus, along with product comfort level. Pull together a prospect list. Make certain you are visible and active in the community. (Referral to SPA Consulting). You should consider purchasing “Key Man” or individual life insurance for business perpetuation or “wrap-up” expenses for survivors. Consider revenue and expense expectations. Review your plan every three months, to determine if you are staying on task. Revise once each year.
- Determine what type of “company” the agency will be. (LLC, S-Corp, Stock Corp, partnership, sole proprietor etc. – you may need a new or separate FEIN)
- Some States require an Agency License in addition to Individual Producer License.
- Make certain you have adequate resource to cover basic business and personal expenses for at least six to ten months.
- All appointing companies will require E&O coverage. If you have a Corporation with a Board of Directors, you may wish to also consider D&O.
- Some states require a “Producer Bond.” You may also wish to consider a fidelity bond covering employees.
- Appointing carriers can take up to six weeks to perform “due diligence” including background checks and systems set-up. Be prepared for the wait.
If you are currently with a captive company, some appointing companies will want to review your portfolio production and loss history. You will want to document or carefully pull together your best reasonable estimates
- Open separate business operating and premium trust fund bank accounts.
- Payroll service? (we can refer)
- Access to group or individual health? (we can refer)
- Consider an Agency Management System. Decide on basic accounting needs and solutions appropriate for the initial size of your agency. Keep an eye on how this plan will service your growth expectations over the following three years.
- Consider a rapid rater for simultaneous multiple company quotes.
- Access to quality carriers for majority of targeted client risks.
- Access to LexisNexis MVR driver records (we can refer). Most carriers require.
- Purchase adequate personal insurance for business interruption such as short and long term disability, and health coverage.
- Affiliation with an “Aggregator” such as SIMG for access to multiple carriers and Excess and Surplus Lines providers, where no or minimal production quotas per company exist.
- Consider development of a Web site to answer clients’ basic questions such as your contact information and willingness to visit with them at no charge, for coverage consultation, etc. We can refer you to someone for free estimates.
- Consider active involvement in social media such as Linked In, Face Book, and Twitter. How will you plan to drive people to those sites? Advertising Budget?
- Find and utilize resources for personal and business educational and motivation growth.