Independent Insurance Agency

How To Start Your Own Independent Insurance Agency


Renegade Insurance

Mar 29th, 2023

Have you ever wanted to enjoy the control, flexibility and earning potential of a self-employed business owner? If that business helped people in your community save money and protect their assets, would that provide even more motivation?

Even better, this business requires some capital, but not the massive investment of typical franchises. It also involves working with large, stable companies that will gladly provide many resources for free. These partners offer upfront commissions and future renewal commissions to provide passive income.

Later, you may have the chance to mentor others to enjoy the satisfaction of growing your business while helping other people succeed. If these benefits describe the characteristics of your ideal business, take a few minutes to learn how to start your own independent insurance agency.

How to Start Your Own Insurance Agency

Like any other business startup, launching a successful insurance agency requires some investment of time and money. However, with some planning, you should find the road to entrepreneurship relatively straightforward, rapid and affordable.

These steps briefly describe the basic process of establishing new insurance agencies:

  • Start with a plan: A business plan should include details about how you plan to succeed, from obtaining required licenses to sources of initial funding. The Small Business Administration offers resources for composing business plans, and the details can change as you gather more information.
  • Gather initial funding: Even if you set up your first office at your kitchen table, you’ll need to spend some money on licenses and equipment. You will also need money to live on while getting your business started.
  • Proceed with licensing: All states require licenses for various types of insurance that you hope to sell. Typically, you’ll need to take classes, pass a licensing exam, and pay application fees. Check with your state’s insurance department for details.
  • Consider other business details: Once you’re licensed, you should register your business and obtain E & O insurance and additional basic business coverage. You can decide if you want to operate as a sole proprietor or set up an LLC or corporation.

Appointments and Marketing

Owners of independent insurance agencies can choose between various ways to help develop the business. Consider your path before you create your business plan or take any of the basic steps. The choice that you make can impact some of your other decisions.

Purchase an Existing Book of Business
One of the perks of a successful insurance agency is that the book of business serves the firm as a valuable asset. Very often, agency owners sell this asset to help fund their retirement. Purchasing a book of business gives new agencies a head start so they can take advantage of an existing customer base and recurring commissions.

However, an existing book of business from a successful agency can cost hundreds of thousands of dollars. While this path to building a new agency offers advantages, it’s the most expensive way to get started.

Develop Your Agency Through One of Two Agency Models
Most insurance agencies get started through one of two agency models. These options include the franchise and the FMO agency models.

Franchise Model
The franchise model can offer some attractive benefits. These advantages typically include a well-tested system, lead generation, digital assets, plenty of resources to help grow an agency and a recognized brand. A franchise can offer a way for agency owners to work for themselves while still having a reliable organization to provide support.

At the same time, some franchises can limit an agency’s freedom with non-compete clauses and other specific rules. Most of all, some franchises charge incredibly high fees, sometimes $25,000 or more. In addition, they typically require franchise owners to keep several thousand dollars of liquid capital.

Even though the franchise model may cost less than buying a book of business, it may still be prohibitively expensive for startups.

FMO Model
The field marketing organization model, or FMO, can offer agency owners an excellent alternative to the franchise model, primarily because it can provide many of the same benefits as a franchise. These perks include help with marketing and lead generation, appointments to top insurance companies and support for agency management tasks, such as renewals and claims service.

With so many things taken care of, you can focus on revenue-producing activities such as selling, while the organization handles administrative details. Rather than charging franchise fees, the FMO model usually splits commissions with the agency. For example, the organization may take 20% to 30% of the commission for new business and 50% of renewal commissions.

Startups won’t need as much capital as they might with the other alternatives. Also, the commission split gives the organization a powerful incentive to encourage the partner’s success. Startup agency owners also have more freedom to run their businesses as they see fit than they would with a franchise.

Thus, the FMO model has recently grown increasingly popular with new insurance agencies. Many thriving firms also switch to this model because it offers a way to expand and grow with support and connections to top insurers.

Take the Next Step Towards Insurance Agency Ownership

Renegade Insurance supports the next generation of top insurance producers with connections to dozens of world-class insurance companies, generous commission splits and complete support for renewals, post-sales service and automated billing.

Advanced technology streamlines tasks, from pulling quotes to managing sales funnels. Backend support and a community of other successful Renegade Insurance agencies mean you can work for yourself but not by yourself. Become an agent with Renegade Insurance and watch your business boom.

Open an Insurance Agency

Start your entrepreneurial journey with Renegade.


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