It is important to decide whether your agency will be an independent one or a captive. Farmers, Nationwide, Allstate are just some of the most prominent captives. Captives often only sell or mostly one brand of insurance. There are benefits and disadvantages to each, so it is worthwhile to research both. You will need to apply for your license in many states. To sponsor your application, an insurance company is required. The property and casualty licensing is required in order to sell auto or homeowners policies. But laws vary from one to another. It is recommended to obtain additional licenses such a license for accident and healthcare, as well as investment type licenses (Series 6, 63).
To get licensed and build a client base, many agents start part-time. The income you earn from owning a business will almost always be through commission. You typically get paid for each policy you sell and then again when the policy is renewed. My area has 20-30 policies per monthly, which is good for new agents. This could pay you between $2,000 and $3,000. It all depends on what kind of sales. Your income after expenses are paid may seem small at first. Your renewal income will grow as your book of businesses growsChurch Insurance Company.
It is possible to buy an established agency instead of starting a new agency. In most cases, you will be paying 2 or more times your annual earnings. For example, an agency with 1,000 policies, which earn $100,000 annually in renewals will most likely charge $200,000 or more. An agency can be funded. You will need to pay 10% down for this financing. SBA is the most popular lender for this type. Texas Capital Mortgage (281) 537-7800 can assist with Texas residents’ business financing. (I’ve found that the mortgage company is a valuable complement to the business of insurance.
You need lots of information to start an agent. I recommend that you spend time researching the company before getting involved. Do your research. Some larger companies have branch offices that can provide information on employment. It is possible that the agent who you purchased your insurance might be willing to share some of his experiences with us. There is also plenty of information online.
Insurance is a great business. But don’t underestimate how difficult it can be! I lost 50K my first year with Farmers. Most of that was start-up expenses. The next year I lost 20K. I am hoping to make some profits in this year. There will be better and worse agents, but this might help you to get some perspective.