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How to Start Your Own Insurance Agency

Updated on January 29, 2009

Interested in Starting Your Own Independent Insurance Agency?


Well, I started out my own insurance agency from scratch. I never had any insurance training. Or even any experience selling or dealing with insurance.

But throughout my life, I always thought insurance was a weird thing. We're required, even if we believe otherwise, to purchase and have insurance. Every year, I easily spend over $1000 on auto insurance and another $2,000 in health insurance. And a couple thousand more in homeowners insurance, flood insurance, and life insurance. I do also own a small business, so we pay insurance on our commercial vehicle, employee health insurance, worker's comp, liability insurance, and a different set of error & omission insurances as well. It's a lot of insurance, but to date, I haven't been able to use any of them yet!

Of course, insurance in theory is a nice thing. Many of us all pitch in to cover for the few that may suffer a loss. Insurance is great when we need to use it. But for the many of us that end up never using it, it's a lot of cost to have to deal with.

Anyway, I thought it was a lucrative business to get into. So I did. And this is how I did it.

Business Model of the Insurance Agency

Like in all my Hubs, I like to talk about the business model of a given business right up at the beginning. It's always nice to know the money aspect of the business before doing anything further.

The business model of an insurance agency is all about building a book of business, or in simpler terms, building up your clients. Why? Because you get commission on the new business that you write and better yet, you continue to get commission as long as your client keeps renewing the policy with you. So it's all about client services, building up your client list, and keeping your clients happy so that they will stay with you throughout the years of your career.

As you know, insurance agents work on commissions. Here are an approximate commission amounts for each of the different insurance products you may write:

  1. Personal Auto: 12-15% Commission on New Business, 10-15% on Renewals
  2. Health Insurance: 15-20% Commission on New Business, 10-20% on Renewals
  3. Commercial Insurance: 12-20% Commission on New Business, 10-20% on Renewals
  4. Life Insurance: 80-120% Commission on New Business, 2-10% on Renewals
  5. Homeowners & Flood Insurance: 12-20% Commission on New Business 12-20% on Renewals

So as you can see, by building up your client list, you can have residual income as long as you service and keep your clients happy. It's really a pretty cool business model.

You can also make additional money at the time of new business in the form of a broker fee. A typical agent may charge somewhere between $50-$300 as the broker fee, and this is on top of the commission you will receive from the insurance company.

People in the industry will say that you can make more money servicing business clients because commercial insurance policies are much more compared to the personal insurance. Would you rather earn 12% on a $400 policy or a $4000 policy? Being able to service commercial clients will mean higher premium which means higher commissions for you. The problem with this is that commercial insurance will typically require additional training and experience because to be a good agent, you'll need to understand your client's business and its risks.

So this is how the business works. If you're excited enough, I hope you can read through the remaining portion of this guide so that you can set up your own insurance agency!

Little Disclosure before Going Further

This HubPage only covers insurance agencies that want to operate and get licensed in the State of California. This is where I got my license, and worked as an insurance broker. Each state has its own rules, so if you are in a State other then California, you might want to use this manual only as a guide to understand how the industry works in California, and how it may work in your state as well. For you people in California, I tried to go through each and every step to start out your own agency.

If you've been working in the industry for a while, it maybe a time to get your own insurance agency up and running. It's never fun to have to split commission with your broker.

Step Number One: Get Licensed!

The first thing is first. You need to get licensed. You need a license to sell insurance in the State of California. To get a license you'll need to contact the Department of Insurance.

The Department of Insurance's website can be found on Google right away. Be sure to go to the California Department of Insurance's site. Not New York, not North Carolina. But California. There, you can find all the requirements to become an insurance agent.

When starting out, there are only three options of licenses you can decide to get:

  1. Personal Lines: This allows you to sell, personal lines, or non-commercial insurance products. Mainly the biggest insurance product in this category is the Personal Auto Insurance Policies and Homeowner's Policy.

  1. Fire & Casualty: This license is sort of like an advanced Personal Lines license, where you can sell Personal Lines, AND Commercial insurance. Examples of Commercial insurance products are like commercial auto, business owner's insurance policy, and professional liability insurance.

Since the Fire & Casualty and Personal Lines have similar educational requirements, I would recommend getting your Fire & Casualty license instead of the Personal Lines. The benefits as to getting the Fire & Casualty license far exceed the Personal Lines. You'll just need to study a bit harder for the test.

  1. Life Agent: This license is completely different from the two above, and allows you to sell health and life insurance. For some reason, getting into business as a Life Agent is much easier then through a Fire and Casualty license.

With regards to becoming your own boss and operating your own insurance agency, I would recommend you to get both the Fire & Casualty license as well as the Life Agent license. By obtaining both, you become capable of selling auto insurance, commercial insurance, life insurance, and health insurance. The versatility will lead to increased business opportunities for you because you can cross-sell to your clients.

Step 2: Go to a One Week Course & Take the Test

There are several schools you can attend to satisfy the educational requirements to take the test with the Department of Insurance. Two of the most popular schools are Kaplan Financial ( and AdBanker ( Personally speaking, I attended both classroom sessions (one for life & the other for F&C) I thought that Kaplan Financial did a much better job teaching the class then AdBanker did. I'm sure it all depends on the teacher though.

Anyway, complete the one week course, and apply to take the licensing exam. Insurance exams have the rumor to be relatively easy, but that seems to be not the case. You better study for it, or you will likely fail. It's pretty difficult to pass.

Once you pass the exam, you'll be licensed as either a Fire & Casualty broker or a Life Agent. Preferably, you want to see both designations on your license. Regardless, after you get the license the you can start working to build your business.

Step 3: The Legal and Administrative Things to Do

Organizational License or Not

Although this is not required, you should consider forming a LLC or a corporation for your agency business in order to protect yourself from any personal liability claims that may end up costing you everything you own in your life. The decision to form a LLC or a corporation is an entirely separate issue, and I recommend you read books from or talk to a CPA or a lawyer to see if this is something you should do.

I do personally recommend you form some type of legal entity. And by doing so, you will need to get an organizational license with the Department of Insurance. You are able to get an organizational license as long as you or one of your officers has a valid insurance license.

An organizational license will cost you a few extra dollars but it is recommended. Rather than advertising your agency as John Smith, Insurance Agent, you can advertise it as Smith Insurance Services, which does have more credibility to your name. However, the decision is up to you.

Surety Bond

Once you have your license(s), you will need to obtain a surety bond. A surety bond is similar to an insurance where the surety bond company may pay a consumer for the any contractual agreement or services that you fail to deliver to your customer. They are basically a guarantor that you will be taking care of business to your customers.

Surety bond for the insurance agency was relatively inexpensive. When we got our surety bond, it was good for three years, and it was less than $100 for the three years. You can find companies that sell Surety Bond for an insurance agency by using a simple Google Search or through an industry journal like Insurance Journal

E&O Insurance

One of the biggest obstacles for in starting up an insurance agency is obtaining your errors and omission insurance (E&O) for Property and Casualty. An E&O insurance protects you, the agent; from any errors or omission that you have performed that caused a significant loss to your clients. Standard policies start at $1 million of liability coverage, and insurance companies that you want to work with will expect you to have that amount of coverage.

Since new agents are a huge risk for E&O insurance companies, it will be extremely difficult to even obtain a quote with an E&O company. If you are an established agent with at least a few years of experience, it should be a little easier to get an E&O insurance. However, for new agents that are starting out of scratch, you should run into a lot of hard work, as I did.

After a rigorous search, online and through insurance related forums, I was able to find a company called Colony Insurance. After talking to them and persuading them that we will not be a significant risk for the E&O Company, I was able to get an E&O insurance from them for about $3000 a year.

On the contrary, it was much easier to obtain an E&O Insurance on the Health & Life side of the business. Generally an E&O insurance in this side of the industry will cost you approximately $500 a year, and Blue Shield had a great program that I was able to use right away. It is recommended that you start off right away selling health and life insurance to your clients, and with that experience move to the P&C side of business. E&O companies in the P&C side will like the fact that you've been selling insurance in the past, and they will be more willing to give you a quote for insurance.

CRA Account

CRA stands for a Commercial Requester Account with the DMV. Basically, this is something you will need to setup with the DMV if you expect to sell personal auto or commercial auto policies. It is an application process that takes roughly 2-3 weeks, and it verifies you so that you can access DMV records. You will need this account prior to setting up some software in the next section.

Step 4: The Software


As an independent insurance agency, one of the biggest advantages that you can offer to your clients is the fact that you can shop around for insurance. Ever wonder how we can shop around for insurance for our clients? Well it's very easy these days thanks to the software we have available. The following software applies to mostly personal line items, like auto insurance.

FSC Rater

FSC Rater by Fiserv is the standard quoting system in California. ( FSC Rater is a pretty fascinating tool, and it lets you glance at any given insurance company's rate all in one click. You simply enter the insured information, i.e. name, address, driving experience, driving record, and they coverage that they want. FSC will then come up with a quote for the companies you work with.

The amazing thing about the FSC Rater is its ability to quote any insurance company insurance company that write insurance in California. So have you seen that Progressive commercial which claims it will come up with quotes of other companies? You can basically do the exact same thing on FSC Rater, but with any company. You can even get a quote for companies that you don't do business with.

The most efficient aspect about using the FSC is a feature called "Bridging." Basically, "Bridging" means you can transfer all of the data that you entered into FSC into the insurance company's own system. You "bridge" the data into the insurance company's system. You won't need to re-enter data, and the quote information should match what you saw inside FSC Rater. All you need to do are some final approval processes and authorization to bind the insurance with the insurance company.

FSC Rater is a great tool, but it does come at a fee though. You have to expect to pay a monthly fee of about $285 a month per single license of FSC Rater. It's not cheap, but you'll need to consider it as a cost of doing business if you plan to do personal lines insurance.

You can call FISERV to setup an appointment so that they can do a demo for you. It's free for a demo, so I would recommend you get it personally so that you know exactly how FSC works and what its features are.

American Driving Record (ADR) & Motor Vehicle Report (MVR)

MVR is a commonly used report when writing auto insurance, and it stands for Motor Vehicle Report. Basically, this is a report of your driving record. It is supplied by the American Driving Record ( and through the use of their software called Comprise, you are able to bring up any person's driving record as long as you have their California Driver's License Number and their last name.

This is a required tool to get to provide your clients with accurate quotes. You will need to run a MVR for each client, and enter their driving record into the FSC Rater to account for any violations or accidents that they may have been involved in.

The MVR does again have a fee associated to it, and it is about $3 per report you obtain through them. By using the "Instant" feature, you can bring up a driving record of your client immediately.

Agency Management Software or Customer Relationship Management Software

Once your agency starts to grow, and you have considerable amount of customers in your books, there may come a time where you can invest in an Agency Management Software. Basically, an Agency Management Software helps you keep track of your clients in terms of their renewals, cancellations, and any other customer service and management related issues. FISERV, the company that provides the FSC Rater also has a software called the FSC Manager that you may want to get at a later time.

Customer Relationship Management software or CRM may do similar things. Personally, I use a CRM software over an Agency Management software because of the type of business we are in. The solution we use is provided by, and it's a very user friendly tool that helps us to keep track of our customers. The fact that it is an Internet based solution is extremely helpful, and it allows you to access information in and out of the office. CRM will allow you to improve your sales processes along with customer service processes, and we found it extremely useful managing our customers and keeping them happy.

Step 5: Getting Appointed with Insurance Companies

If being able to obtain the Errors and Omission insurance was the hardest thing, the next most difficult thing on you "To Do" list will be to get actual appointments with insurance companies. Here you are basically asking the marketing representative at each insurance company that you want to work with them, and it is in their best interest to do so. You'll need to convince them that you will be able to write a certain number of businesses each month so that it will be worth their time in order to appoint you to write insurance for their company.

It usually helps for you to have a business plan, and how you plan to maintain and grow the amount of business you write for them on a monthly basis. The insurance companies want to see realistic numbers so that it's worth their time. The first company will always be the most difficult to get appointed with. It helps if you have some connections or know some people within. If not, convince them through your passion and business plan that you are serious and will be good to do business with.

The first company that appointed us was AIG Auto. The company was great because AIG is always looking to expand their market, and they had a system that didn't require us to have FSC to start out with. At the initial phases of the game, forking out $280 a month for the FSC Rater with no appointment with insurance companies was a big risk to take for us. AIG accommodated us well, and we've been working with them ever since.

Loss Ratio

One thing that gave me hiccups when I was filling out the appointment application forms with the insurance companies was what they called "Loss Ratios." At the start up phase I had no idea what that was, and I didn't know what to put on the application; especially because I didn't have any business or loss ratio to refer to.

Loss ratio is basically the amount of loss your clients have versus the amount of premium you write with a given insurance company. It helps to understand what kind of market of customers you typically serve. The lower the loss ratio, the better since that means your clients are not getting in an accident and making money for the insurance company.

To give an example, say you have 10 customers, all with an annual premium of $1000. You have written $10,000 worth of business given that all of your clients stay with the insurance company until the policy expires. One of your clients gets in an accident. The accident ends up costing the insurance company $10,000 to fix the other person's car, and pay for their medical. At this point, your loss ratio will be 1 (100%), or $10,000:$10,000. You've written $10,000 but your client has cost the insurance company $10,000. They are at a break-even. You'll need to write more business to help the insurance company make money.

Insurance companies know that insurance works in the law of averages. They prefer loss ratios of 50% or lower. If for some reason you have a market that seems to get into more accident then the average, they may decide to fire you later. At the start up phase, they may decide not to appoint you.

Managing General Agents (MGA)

A managing general agent (MGA) is a person or firm authorized by an insurer to transact insurance business who may have authority to bind the insurer, issue policies, appoint producers, adjust claims and provide administrative support for the types of insurance coverage pursuant to an agency agreement.

Basically, these are middleman that can help the smaller independent agents like yourself and me. In some cases, getting appointed with a certain insurance company becomes not favorable or feasible because you know that you will not be writing enough business for them. As an example, say you have a cousin that is a plumber and that allows you to write a commercial insurance policy in this category each year. But because that's not your core business competency, it will be very difficult to find and get appointed with an insurance company that writes these kinds of business. So in cases like that there are companies like Insurance Noodle, which will allow you to be able to work with companies that write insurance in this industry.

By using a MGA like Insurance Noodle, you will need to split commission with them. However, it allows you to become more versatile in offering different product lines to your consumer base. Many agents use Insurance Noodle and other similar companies with great success.

Step 6: Market Your Business and Sell, Sell, Sell!

So at this point, you are ready to get yourself rolling and start selling insurance to everybody around town. As in any business, marketing is the single most important aspect of running your own insurance agency.

Each of these sections are a whole different post, and fortunately for you, I have posted a lot of good information for you already. Be sure to check it out.

How to Create a Marketing Plan

Here's another link for a retail sales process that I posted. This post is related to a cell phone store sales, but you should be able to used it in insurance as well.

Sales Process

You should also check to see if owning your own business is right for you.

Are you an Entrepreneur?

Step 7: Associations and Continuing Ed

Once you have everything in place, and you are selling insurance, it is time for you to start networking with other agents and representatives from insurance companies. There are several associations you can join to exchange information, learn, and network with other agents.

It is recommend that you join one or two of these associations once you have the time and resources to attend their meetings, and get the most benefit out of these associations.

Latin American Agents Association (626) 444-0999

Western Insurance Agents Association (800) 553-4221

Insurance Brokers and Agents of the West (800) 772-8998

And Many More...

Continuing Education

Continuing education is key to making a career out of what you do. The State of California continuing education requirements that you must satisfy every couple years, and most of them can be done online. They are basically there to keep your knowledge in the insurance industry as current as possible to maintain your professionalism in the job.

If you are ambitious enough, you can also try to go get advanced insurance licenses such as:

  • CLU® - Chartered Life UnderwriterTM
  • ChFC® - Chartered Financial ConsultantTM
  • CASLTM - Chartered Advisor for Senior LivingTM
  • RHU® - Registered Health Underwriter®
  • REBC® - Registered Employee Benefits SpecialistTM
  • CPCU® - Chartered Property Casualty Underwriter®
  • ARM® - Associate in Risk Management®
  • AIC® - Associate in Claims®

It is really up to you as to how motivated you are, and how successful you want to be with your career.


Thank you for reading this far and I hope that the information contained in this HubPage was beneficial for you. I am constantly striving to improve this page so please email me for any questions, comments, clarifications, corrections, or your personal experiences in your road to making your own agency into reality.

Thank you and best wishes to you all!


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    • Spencer Wouldhe profile image

      Spencer Wouldhe 16 months ago

      You will definitely need a good Claims Management Software, and Policy Handler. Luckily has you covered. JW Software has been in the insurance industry for over 25 years. FileHandler & PolicyHandler are one of the leading programs trusted across the board.

    • profile image

      Vance Meyer 4 years ago

      Do you have a business plan for starting an agency? If so please email it to me at



    • profile image

      Peggy's Insurance Service 4 years ago

      You rock. Great Info!

    • profile image

      Nor 4 years ago

      Hi, great infos, I really appreciate it.

      I have no experience on this industry but I want start my own insurance agency. What would say to someone like me?

    • profile image

      Moss 4 years ago

      How do I get my agents temporary license?

    • profile image

      Mark 4 years ago

      Thank you for the very detailed and neutral information. I have this dream to work for myself. Even when I think how scary it might be at first I think then of how miserable I am working in my present career. Thank you so much for fueling my dream.

    • Sean Shock profile image

      Sean Shock 4 years ago from International

      Thanks for the tips, It's a lot of work but at least I know what to work at now.

    • profile image

      Samba 4 years ago

      Hi, I'm in CA and I have my Life and Health license. I want to start my own small agency from home because I'm tired of splitting my commission with the agency I work under, I want to be my own General Agent. I need to know if I need my P&C as well just to operate as a Broker? I will be doing mainly life and health.

    • profile image

      sheryl1221 4 years ago

      I am working on starting my insurance agency and I am so thankful for this information. I have been an agent for only one year. However, I have this drive to get my own agency. Please I am asking you for your advised on starting my agency. Starting out selling life and health,

    • profile image

      Jeanette 4 years ago

      Thank you for this very complete and informative outline. I am now much clearer as to what needs to be done in forming the agency that I wanted to put in place. I sincerely appreciate your help. Now I can get started. Thank you sooooo much.

      May God continue to Bless you and yours

    • profile image

      Reddyred 5 years ago

      I love you for this article thank you so much you have no idea how much this just meant to me. What's your email.

    • profile image

      Ms.Yolanda S 5 years ago

      Planning to do the same, worried about the insurance but hopefully my perserverance is is just as tough, Thanks in advance for the article.. Wish the rest of us luck.

    • profile image

      KIM 5 years ago

      GREAT, GREAT information on how to start an independent insurance agency. Thank you so much for unselfishly sharing these invaluable ideas to us, who want to start an agency.

      EXCELLENT..............................ANSWERS ALL MY QUESTIONS

    • profile image

      besik 5 years ago

      Dear Sir,

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    • profile image

      Dan 5 years ago

      I was under the impression that you started your own company. This sounds like you sell other peoples insurance and get a commission...

      Im looking to start my own from scratch, like put up the funds and create my own. Was looking into the moving insurance business. Mainly into cargo insurance.

    • profile image

      JACOB 5 years ago


    • profile image

      Leo 5 years ago

      Your information is helpful. I am trying to start my own independent business and this article is giving me a clear path of the road ahead.

    • profile image

      Previous State Farm Agent Employee 5 years ago

      Article is very helpful. The only thing that I don't agree with is that working for a big company is the besy thing you can do. Alot of the State Farm an Allstate Agencies that you see are independently owned. Most of the agents don't offer healthinsurance or Retirement Plans.Once you get to office manager there is no growthand you end up reailizing that the ones that are really we off are the people on the other end of the phone-the people that work at the actual company or the corporate office and to get there you have to have minimum a Bachelors

    • profile image

      tc 5 years ago

      HI: I am planning to open a insurance agency from scratch in CA. I have all my license. Trying to get a name for th ebusiness plus get Business card and signs. I am not sure if I am suppose to submit any kind of paperwork to DOI for approval? I was told by other agents that we don't need to notify DOI and open office.But reading DOI information, I have to inform DOI my business name ans sure that no one else have the same businss name? That is my confusion. Please advise....

    • profile image

      Christine 5 years ago

      What are the requirements as far as an insurance office, signage, physical address etc. In other words, can you operate from your home or is there a criteria you must follow?

      I'm interested in North Carolina. Thank you,

    • profile image

      rewards 5 years ago

      looking to start an agency from scratch in Houston Tx and am looking to partner with someone to help share the cost. Please contact me if you are interested

    • profile image

      Alex Mekonnen 5 years ago

      Hey, my friend, I read wonderful story with great work experience as well as impressive knowledge, however I have never been insurnce agent before, but now I'm thinkig so pls email me at you..!!

    • profile image

      Scott 5 years ago

      Thankyou for putting this out there. I am a health and life agent in Florida and am tired of working my butt off to give large percentages away to the broker and so callled "trainers". Everyone wants a piece of the pie. I just wanted to see if I could take my business in my own hands and your hub has given me the information and inspiration I needed. There are about 5 agents waiting to start from scrach with me, so I believe it is time to get the show on the road. thankyou


    • profile image

      chads 5 years ago

      this has always been an interest to me. you have provided me with some great ideas.

    • profile image

      AgencyEquity 5 years ago has a number of resources to help those start an Insurance Agency, including our Guide to Starting an Insurance Agency:

      Our Information Request Page:

      Our Cluster an Alliance Directory

      Other Start up Resouces:

    • profile image

      LINDSAY 5 years ago


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      curious 5 years ago

      Hi, I am thinking about starting my insurance career with Farmers. Do I get to keep my book of business if later I decide to start my own independent agency? Or will I be able to brokage other insurance carriers besides Farmers?

    • profile image

      jay 5 years ago

      thank you for sharing your experience. its very helpful

    • profile image

      Mirela Saric 5 years ago


      My Name is Mirela Saric and I am originally from Europe. I came to this country 17 years ago. I have BA degree in Communication but I always loved Insurance because one of my first jobs here was at Farmers Insurance. Right now I am planning to open my own Independent agency. I will sell insurance and also provide other professional services to my community such as help with getting disability benefits, citizenship and many other services because i do have experience and my community needs help in these areas.. This way I am sure I will have many clients in insurance aspect as well because people from my country and countries that surround my country trust me and would come to me for business and they stay with one person for ever as long as they trust the service I provide to them. So I really wanted to thank you from the bottom of my heart for all the info you provided because it is hard to start your own business and it seems that no one wants to share their advice. You are an amazing person and you will succeed even more because you are helping others. I also have helped many people and always tried to do so and that is why my community trusts me. Here is my email so please contact me. I would love to keep in touch and if I have any questions or if maybe I can be of any hep to you please feel free. Thanks again.. Mirela

    • profile image

      Susan 5 years ago

      We are starting up our agency . Looking at clusters like PIIB and other options like SIAA . Does anyone have any thoughts on the best way to go and are there any other good clusters like PIIB

    • profile image

      Andrew Gravel 5 years ago

      I can help anybody in the US get started writing life insurance. I have recruiting agents all over the country so if your interested just find a way to contact me.

    • profile image

      Latinita 5 years ago

      Thank you so much for taking your time and informing us about the How Tos on starting up an Insurance Business. I have a small capital and have been considering a business like this. This article is very informative. Thank you, thank you, thank you. Just one more thing please, same question as Mr. Green, what role would the personal credit play if any in getting appointed with the insurance companies?

    • profile image

      Mr. Green 6 years ago

      I think the info in this hub is outstanding. I have been searching for info like this for while. Im band new to the business and I read one person's statement about credit rating. will a bad credit rating stop you from being appointed with ALL insurance companies?

    • profile image

      Donovan 6 years ago is the best licensing training in Kansas!

    • profile image

      Holli Wilson-Louie 6 years ago

      Great Hub...I have been in the insurance industry for the past 32 years. I started out as a captive agent and had an agency for 4 yrs. I was young and really had no guidance to open and run my own agency. I hung in there for 4 years. I then decided to go inside and work for other companies as a sales agent for them. The experience was invaluable. I'm grateful that I had the opportunities I had. I was just laid off from my last position and have been thinking about opening up my own agency again. I appreciate all of the information that you provided. I won't be going in blind this time.

      Thanks again.

    • profile image

      Very Green 6 years ago

      LOVE THIS HUB!!!

      I'm starting my own agency and like you, I have no insurance experience. I've lived in the same town for 40 years and worked in local media since I was 16. Luckily, I have great relationships in my state. From business owners to politicians to towns people. My business partner is in a similar situation. Very well liked and well know. We both also have sales experience. To say I'm nervous is an understatement. At the same time, excited for the future. Do you think these are things we should use to sell ourselves to the companies we plan to rep? We have a few other local owners that we are friendly with who have been mentoring us. Do we use them to help us with Errors and ommissions coverage? We both have solid business experience handling multi-million dollar budgets. This is a whole new world though. We both passed our exams and received state licenses. Thanks again!

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      Joshua Nichols 6 years ago

      While I do not disagree with anything said I would like to add that this industry is a lot harder to tackle than one may think. As owner of a successful insurance agency I will tell you it has not always been fun. On top of getting a Insurance License and maintaining it through required continuing education classes. You have to get appointed with a insurance carrier. This means they allow you to sell their products. Most are different on their requirements but all require personal credit checks and background investigations and separate training for you to become appointed. Some require you have a office outside of your home and have proof of funds so your not considered a "shell" company. Malpractice insurance "E&O" is required and most set limits that must be met. If your considering starting an agency I would suggest you don't venture into it hastily work for a local insurance agency and learn to prospect for customers and ensure this is what you want. Insurance is highly regulated and your state insurance commissioner will audit you and your carriers will preform cut backs on amount of agents they have appointed. You then need to figure out what your going to do for your clients. If your agency fails you not only hurt yourself but you hurt everyone of your clients. I do not mean to discourage anyone, but this is not a get rich quick industry. It takes years of prospecting and developing to become truly successful. I wish you all success just make sure your aware what your getting into and have a plan to support your family for at least a year as most agents do not make much of a profit their first year regardless of what recruiters may tell you.

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      john 6 years ago


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      DEE 6 years ago


      THANK YOU....

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      HODGENS 6 years ago


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      mymoneylink 6 years ago

      Thank you for the great info.

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      Ibrahim 6 years ago


      starting your own agency can be stressful but there ARE easier way to do it. contact me for some first hand advice.

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      c21neal 6 years ago

      Looking to open a coastal agency in NC, does anyone have any recommendation for independent writers, like Smart Choice , who is their competitor

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      Paul Chan 6 years ago

      It is great help. Good work. My question is. I just passed PC exam in CA and would like to sell Surety Bond.

      I do have underwriting skills because I used to work for Surety Company. In this case, do I still need E & O insurance for my own agency? and any suggests to me to be surety bond agent?

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      Mark 6 years ago

      Can you please share best companies to be appointed with in California? Both personal & Commercial lines please. Thank you so much!

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      Mencia 6 years ago

      Great information. Very detailed, informative, and useful. The steps are easy to follow making getting

      started a possibility. Now I can see having my own agency as a reality, no longer a dream. Thanks!!!

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      Sara Arjmand  6 years ago

      Thanks so much for posting such a useful article! Well written and very informative!

      Appreciate your time and effort

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      Tony Tong 6 years ago

      Very practical and informative

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      Jacqueline 6 years ago

      Does anyone have any recommendations between PIA (Professional Insurance Agency) based out of China, or PIIB (Pacific Interstate Insurance Brokers) which is local to California as clusters/networks for an independent agent?

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      Jason 6 years ago

      Great article! It was really well written and informative.

      Just to clarify one thing -- you mention comparing rates 'like' I just wanted to point out that Progressive uses publicly-available information to estimate what they think each user's quote with another company would be. It's only an estimate and isn't always helpful (they quoted me "$800 to $4,800/year" with State Farm).

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      Ty Lim 6 years ago

      I see that you are a serial entrepreneur. As for making your first million, what is your thought about FOCUS (Follow ONE Course Until Successful)?

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      Ty Lim 6 years ago

      Great article. Informative, accurate, easy to read and understand. I am in process of starting my insurance brokerage (selling Life and Annuity).

      Also liked your article on marketing. Ablolutely true. Marketing and Sales are key to success.

      Thanks for your contribution.

      You seem like a really nice and authenthic business man, the kind I respect. Feel free to reach out to me if I can support you in anyway. Here is my linkedin link:

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      SB 6 years ago

      Thanks for your article. It was well written and very informative.

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      Mick 6 years ago

      While the article is well written, it is geared to starting your own business as a broker, not an agency. What is clearly missing is the very difficult challenge of obtaining an AGA contract from an MGA in order to attract your OWN agents. It would do you no good to have a producer contract. MGAs don't readily give out AGA contracts, and they only give them out to highly experienced brokers due to liability and retention issues.

      And even if you did get an AGA, you still need to recruit agents to work for you! Your AGA contract bonus will ALWAYS be less than the MGAs, so why should an agent work for you and not directly with an MGA? You will have to pay them less and offer them a perk or two. Even so, you will probably only be attracting new people in the business, so you are back to square one in terms of spending all your time training them to get a very small override bonus.

      Sometimes it's just not worth it unless you have 50-100 agents working for you.

      I'm not trying to discourage anyone. Being a PRODUCER can be highly rewarding, IF you are writing all the business. Being the owner of an AGENCY is a completely different thing. I am just sharing the facts.

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      Sunshine 6 years ago

      Very informative for start ups.

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      Lina 7 years ago

      if you are not sure about been an exclusive agent or not then just go with a MGA, start writing your business plan to present it.

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      ChildofGod/Indiana 7 years ago

      Thank you very much! Very informative.

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      view360NOW 7 years ago

      Thank you very much for having taken the time to write this page up for those of use looking to improve ourselves. As I continued to read your page I wrote down some questions in regards to Step 5: Getting Appointed with Insurance Companies My first question is: How can I get Appointed with insurance companies if It’s my first time in this type of business p.s. I have a very successful Tax Company, and when I do get appointed will I only be able to offer that insurance or will I be allowed to sell other insurance with companies I am not yet appointed with?

      Should I first get appointed with as many insurance companies as possible and then purchase the FSC Rater software?

      Any more information in regards to step 5 would really help me,

      Once Again thank you very much.

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      Stephen Wray 7 years ago

      Thank you very much for having taken the time to write this page up for those of use looking to improve ourselves. As I continued to read your page I wrote down some questions in regards to Step 5: Getting Appointed with Insurance Companies My first question is: How can I get Appointed with insurance companies if It’s my first time in this type of business p.s. I have a very successful Tax Company, and when I do get appointed will I only be able to offer that insurance or will I be allowed to sell other insurance with companies I am not yet appointed with?

      Should I first get appointed with as many insurance companies as possible and then purchase the FSC Rater software?

      Any more information in regards to step 5 would really help me,

      Once Again thank you very much.

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      Jessica 7 years ago

      Very useful information thank you!!! I have the same questions that was posted a few months ago by NK. My husband and I are debating on whether we should open an independent agency or open an Allstate or StateFarm.

      If you could be of any assistance it would be greatly appreciated.

      Thanks again!!!

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      Luis 7 years ago

      Just wanted to thank you for your hub it was very helpful, like you i too haven't had any experience in the field of insurance. i just got my license(property&casualty) in NY state and now going for my life & heath insurance. I am thinking of opening my own agency but thought i should maybe work for a company to get some experience. Do you think it would be easier to get the experience first or should i just try going off on my own?

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      KilmaF 7 years ago

      Thank you so much! I also found your article very interesting & helpful. I am going to be taking my P&C exam in a couple of weeks after I take my course. I have been in the ins biz for 4 yrs now as a CSR for an independent agency in South FL. My plan is to continue in the coming year in the agency, as I am hoping for a promotion as manager in January, b/c the current one is pursuing a different career path. I have a couple of questions:

      1) What is the average salary that an insurane office manager/agent should receive?

      2) The 10k amount that you mentioned as the average starting off amount, is that for the whole year?

      3) I believe that the loss ratio here in S FL is horrible, but then again, the premiums are always high. I want to sell ins, but then again, I don't want to pick uop the phone & hear about a hit & run or accident that a client was involved. Is Ca compared to here regarding, bad drivers?!? I don't know if I should move.

      Again, I want to echo the positive responses that everyone has posted on here about your article. Great job!!!

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      Jvilla 7 years ago

      Great and easy to ready article!

      Like many agents out there, I'd love the idea to star my own business. I am licensed in P&C and L&H since 2003, I have been working for a broker strickly comission base split 70/30. I am afraid to take the risk to be honest because it is very hard to start all over again if you have a family. a word of encouragement from my clients sometimes motivates me but I still undecided to take my first step in this difficult business. Help!

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      Harry 7 years ago

      Very helpful.

      In CA, cany start an insurance agency out of your home or do you need an actual office space ?


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      George Fods 7 years ago

      I like the technical aspect of the article. I am currently a captive agent working for a major insurance company. Looking to possibly starting my own company. When you are a captive agent, there is a lot of business that leaves your doors because of price. No matter how much you sugar coat the coverage, in this hyper competative market the price will always win. So having your own company and being able to offer a variety of different prices, helps you keep the client.

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      arman martikian 7 years ago

      Thank You so much. All this information for free.

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      Judy 7 years ago

      Can I own an insurance company without an insurance license if I have licensed agents working for me?

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      Matt 7 years ago

      THANK YOU!!! This information was very useful and I can't wait to open up my own agency, I got my P&C license. I used to own a fast food business but I needed a business that was more challenging and on going with education and positions and insurance was it. I am 28 years old, live in south jersey and have a place in mind for my agency but I want to partner up with someone that has a little more experience than I do. If anyone is interested please E-mail me and we can discuss our plans for start up, ( mattabdali@YAHOO.COM ) THANK YOU,

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      bella 7 years ago

      I worked for a Broker doing auto, home & commercial policies for 4yrs...i worked very closely with him during a daily basis in all aspects of the office..this is the most detailed and accurate info i have read..i am also in the process of getting my brokers license with the hope of having my own office upon passing the exam..

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      abe 7 years ago

      Hi, I am in te state of GA. I currently work for a small agency and am thinking about starting my own. Do I have to be an agent or be sponsored to get my agent's license?

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      roycheong1031 7 years ago

      Hi! Great info. here! Thanks to How2start!

      I have been in retail ins. agency for few year and now are just start to work on one of the retail ins. agency; I will handle their Personal line only first. They came up with an initial offer that for all new business I will get 3% from it first...Am I being rip off? or this is usually the case to start with? Need advice and comment. Thanks!

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      Carlos 7 years ago

      I am new to P&C in fact will be taking me test in AZ in two weeks. I have a friend that has 8 auto body shops in Phoenix that needs to be insured but wanted to find a person to refer it too that would not take all the $$$ ... Also I would like to be able to do Home and Auto but figure out a company that i can keep the trails. I have the marketing down to generate the leads just want to make sure I pick the correct way to get start.. im thinking about the Broker option to start..

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      adriana 7 years ago

      excellent article

      i'm not in the industry but is so well written that I understood every step of the process.

      interesting and clarified some details i was looking for.

      thank you

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      Mario 7 years ago

      I was wondering since I'm currently an exclusive agent at a large insurance company, what would I need to do if were to leave, in regards to show I have an appointment? Would I need to get an appointment with a new company or could I just state that I'm starting my own? If I remember correctly, if I cancel my current appointment my license becomes inactive until I get another appointment. So would that stand as an obsticle for uptaining a new appointment? just curious about it, since it wasn't mentioned in your hub.

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      Nadeem 7 years ago


      I was sleeping and when got up I hve an idea that I should form an insurance company .I never thought before abt it and I had no idea at all .with my start I write how to open insurance business and strightaway I read this was really impressive and full of guidence especially for beginers like and I think it is informative for working people.

      In the end thanks mate it's really nice piece of work.

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      insdoc91 7 years ago

      I'm a captive agent (used to be indpendent) who's moved to a smaller town not knowing many people. What's the best way to market and how much $ will I need for marketing? We offer auto, home and life.


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      Ulises 7 years ago

      Thank you for your post! It's very good and informative!

      I only have one question for you. Is there a reason why you got out of the Insurance biz? I'm sure you probably moved onto bigger and better things but I was just curious because I'm starting my business. I want to make sure it's worth it.

      Thanks in advance!

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      nyomi 7 years ago

      Hi does anyone know of any other MGA's similar to insurance noodle to offer more variety in california I would like to start with 2-3 MGA's to have access to over 50 carriers to start?

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      MOHAMMED  7 years ago

      Great information for new or inexperience agents in the insurance business, who have the entrepreneur spirit of starting out their own agency.

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      John 7 years ago

      I would also recommend that you attend the yearly fall Palm Springs, CA convention(Sept 23-26,2010)of The Alliance of Insurance Agents & Brokers which is the largest convention on the west coast. You will learn more there in a few days than you could the rest of the year about getting your business going from people just like you who have donne it themselves. The markets are all there for you.

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      ycy 7 years ago

      yeah yo

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      CarlieKathleen 7 years ago

      Oh, and in order to start your own agency, the majority of the carriers, at least in the state of Arizona, REQUIRE that you have a retail, storefront location before they will offer you an appointment. They aren't looking to work with people in the footie-jammies. :)

      And, one last thing - If you EVER plan on being a reputable company with let's say a minimum of $1,000,000 in P&C premiums, you need to have a decent Agency Management System to keep track of your clients, policies, etc. I HIGHLY recommend AMS Services by Vertafore. This system is expensive ($2000-5000 down and $250-500 a month), but is ENTIRELY worth EVERY penny! They keep track of your accounting, download policy changes/cancellations/etc. directly into your system, manage your sales flow, agency net worth, vendors, carriers, customers and anything else you could ever think of....

      I know from experience.... If I had a chance to do it all over again, I would!

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      CarlieKathleen 7 years ago

      USLI (United States Liability) offers THE best rates for E&O Insurance... It is approx $2,000 per year for P&C, Life and Health. Go through a General Agent - Med James is great and they pay 11% commissions if you quote it yourself online.

      Colony is WAY too expensive!!!

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      kpcalifornia 7 years ago

      This is a great post! I have been looking for a site like this! I have wanted to start up as an independent agent for a while and this is perfect. I am in California too!

      Since you are THE person to ask on this, if I only want to offer life, disability and LTC, do I need a surety bond? Also do I have to be affiliated with a general agency? Can I be appointed to various companies by a wholesaler and still be considered independent? Would that be advisable? Thank you!!!

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      Jayant 7 years ago

      superb !!

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      abdul qayum 7 years ago

      Good guide to start from

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      Gina 7 years ago

      Great information. Thank you so much.

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      sam 7 years ago

      Any Good MGAs for commercial?

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      nick 7 years ago

      hey how2start....

      first of all, thank you for sharing this information. recently i have considered starting an insurance agency in my home town, and your hub makes everything alot easier.

      the question i have for you is very simple. i was wondering if anybody can be an insurance writer? i mean as an agency, you are pretty much selling insurance from different companies. if i have my own insurance agency, can i sell my own insurance, rather then sell an other company's policy? i hope you can reply to this. thank you very much.


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      Michael 7 years ago

      For some reason there are so many Colony Insurance on google. Do you know the web address or phone number for COlony Insurance, I have had my life/health agent license for over 5 years but just received my P&C license last week and it is almost impossible to find someone that will give an E&O coverage for this field...thanks in advance..

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      jd 7 years ago

      Do you have any idea if I can use the word "agency" in my company name if I am not a licensed business entity..rather a producer with a DBA with the company name under a differently named LLC? No one can answer this question for me. thanks!

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      Roxy 7 years ago

      Thank you so much, this is the best step by step information I have seen so far. I have a P&C and Life (in FL) I have a passion for this business and I do enjoy it. After reading this article I am more enthused about starting my own agency. Does anybody have any specific information about south Florida? are there any support groups or mentor groups that I can join? thanks

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      Toni 7 years ago

      This is the best site on the web in regards to starting an insurance business. Really! I wished I had found this site over a year ago as it took me 4 months to research and gather everything you discussed here. To come to one site and find it all would have been icing on the cake and I have to applaud you for doing with so many refuse to do as if they fear someone will take their customers. I've been in real estate sales since 2002, worked as an insurance adjuster for 2 years and then decided to open my open insurance company and obtained my P & C license a year and a half ago. It was a headache trying to get answers and many sites would try to discourage you without giving you anything helpful. I want to thank you for helping those who have and will come to this site with questions like I had. This is truly a treat for them.

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      BizmanIndiana 7 years ago

      Nice article. I've been a Personal Lines Underwriting Manager for many years and now have taken the jump as an agent.

      I did want to clarify a misstatement in the original article. Step 5 under Loss Ratios stated that break even was 100%. That is not true. Break even is different line by line and company to comnpany. Break even for autos can be 75%, because MVRs, loss reports, salaries, light, heat, etc, need to be added into the cost of doing business.

      If your loss ratio as an agent is 95% for a number of years, you might think you are making money for the insurer. But if the break even is 75%, you could see your appointment quickly vanish.

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      shadowsdad 8 years ago

      It's always great to find an article that is written from the perspective of the client AND the business owner. That way, the reader knows that the contributer understands both being a customer and is now providing service from your own company. "Been there, done that."

      Your information about commission rates for various insurance options is extremely valuable for future owners of insurance agencies. And your six steps are explained very well for anyone interested in owning an insurance agency. I'm glad that you point out that your perspective is in California so the reader knows to adjust if they are in other states.

      Thank you for your contribution.

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      shadowsdad 8 years ago

      It's always great to find an article that is written from the perspective of the client AND the business owner. That way, the reader knows that the contributer understands both being a customer and is now providing service from your own company. "Been there, done that."

      Your information about commission rates for various insurance options is extremely valuable for future owners of insurance agencies. And your six steps are explained very well for anyone interested in owning an insurance agency. I'm glad that you point out that your perspective is in California so the reader knows to adjust if they are in other states.

      Thank you for your contribution.

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      flair72 8 years ago

      great hub... as an insurance broker, how do you keep track and pay your sales agents?

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      TnFlash 8 years ago from Tampa, Florida

      Excellent Hub! This is good information on starting your own business. With jobs being scarce, it cold be a viable option for some people.

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      Fred Costa 8 years ago

      I am taking my license (Casualty & Property) test in couple weeks after fininshing my training class. I have worked in Banking for the last 4 years, and I have build a very strong book of business of Personal, Business & Commercial clients in Florida (Mostly Latin American) also one of my business partners is a CPA that will give me all of her book of business which are over 7500 costumers (majority Latin Americans) therefore we have all the sell side covered, my questions to you would be: Does the fact that I have a guarantee book of business helps me to get appointed with a Insurance Company? And if it does, how should I present this to them? And what company should I try to start with?

      I appreciate all this information it has been very helpful.

      Thank you

      Fred Costa

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      B Ho 8 years ago

      Excellent. I will revisit this site.