The debate over whether it's better to be a captive insurance agent or an independent insurance agent is a subjective one. Each agent gets to decide for themselves if they want to be captive and sell under the umbrella of a large carrier or if they'd rather represent multiple carriers as an independent. Since most agents start out as captives working for a large carrier, they've already got the experience and understand the security and support that come with working for a previously-established company, however some agents may feel like their hands are tied when it comes to the type of coverage they can offer their clients. Captive agents may also struggle with being under the thumb of a larger when it comes to compensation. For these reasons, lots of agents decide they'd rather become an independent.
The first thing an agent needs to do when they've decided to go out on their own is create a business plan. They're starting your own business. They've got to be prepared in all of the traditional ways entrepreneurs prepare to start a company from scratch. They'll need to determine a legal structure for your business so it's important to decide whether they're planning on being the sole proprietor, or if they'll need a different legal structure to support a partnership and/or possible employees.
Next, agents will have to identify the market in which they're going to operate their agency. Where is their business located? Who will they take on as suppliers? Who are their competitors? Are they going to offer several types of insurance or focus on one type?
Once that's decided, hopeful independents have got to scrutinize over the details of the business - risks, finances, budget, projections, and production forecast. These types of details are what build a strong business plan, helping them to secure loans, financing and even commercial property.Lastly, it's time to get licensed. Each state is different when it comes to the legalities of operating independent agents.
Be aware of what you state requires when it comes to recurring certifications, licensing exams, having multiple licenses for different types of insurance, and/or continuing education courses. And these all just apply to the proprietor. If terms of the business itself, independents need to acquire business licenses and permits, purchase E&O insurance, and select a client management system. Overlooking any of these issues could mean big problems for an independent's agency.There are lots of things to consider before an agent embarks on a solo journey. This is just an overview. If you or someone you know is considering becoming an independent agent, check out
Career Insurance Agents. CIA helps agents transition from captive to independent and offer their support each step of the way. If you're ready to make that leap, it's best to do it with a company like CIA who wants to see agents like you succeed.