How to start your own independent insurance agency

1. Welcome
How to Start an
Independent Insurance Agency
Donegal Insurance Group 1
Southern Insurance Company of Virginia

2. Independent Agent v. Captive Agent
 Independent Agent  Captive Agent
 Agent Owns the business, can sell  The Insurance Company owns the
or transfer ownership to anyone business, although the Agent may
they choose have some limited buyout
 Represents several companies available when they leave or
retire; business remains in the
 Wide variety of products for many name of the Insurance Company
types of individual and business
clients  Represents 1 primary company
(Ex. Allstate, State Farm)
 Can switch you to another company
if your situation changes or you  Limited number of products; some
don’t like the company or service don’t offer commercial insurance
 Agent can’t switch the client to
another company if their policy is
cancelled, their rate increases, or
other changes occur
Donegal Insurance Group 2
Southern Insurance Company of Virginia

3. Strengths of the Independent Agency System
And Challenges
Strengths
 Ability to represent a variety of different carriers
 Ability to specialize in niche markets
 Ability to serve many needs of many clients
 You are the decision maker for the business
 The business is an Asset that can be sold – You own your policy expirations
Challenges
- No name recognition (unlike captive Agents)
- Little or no technical support
- Little or no help with start up expenses
- Difficult to start from scratch
- Lack of markets/products
- Errors & Omissions insurance can be costly or hard to obtain
- It’s always a competitive marketplace
- Income swings are common for the first few years
Donegal Insurance Group 3
Southern Insurance Company of Virginia

4. Is Entrepreneurship For You?
 In business there are no guarantees.
 There are risks associated with starting a
small business.
Carefully consider each of the following questions:
 Do you have sufficient cash flow and financial backing to start a
business?
 Do you have the ability to develop a client base quickly?
 Are you a self-starter?
 It will be entirely up to you to develop projects, organize your time, and
follow through on details.
 How well do you get along with different personalities?
 Business owners need to develop working relationships with a variety of people including
customers, vendors, staff, bankers, and professionals such as lawyers, accountants or
consultants. Can you deal with a demanding client, an unreliable vendor, or a cranky
receptionist if your business interests demand it?
 How good are you at making decisions?
 Small business owners are required to make decisions constantly – often quickly,
independently, and under pressure.
Donegal Insurance Group 4
Southern Insurance Company of Virginia

5. Is Entrepreneurship For You, continued
 Do you have the physical and emotional stamina to run a business?
 Business ownership can be exciting, but it’s also a lot of work. Can you face
six or seven 12-hour work days every week?
 How well do you plan and organize?
 Research indicates that poor planning is responsible for most business
failures. Good organization – of financials, inventory , schedules, and
production – can help you avoid many pitfalls.
 Is your drive strong enough?
 Running a business can wear you down emotionally. Some business owners
burn out quickly from having to carry all the responsibility for the success of
their business on their own shoulders.
 Do you have realistic goals?
 If your decision to start a business is based upon the success you see others
having as a business owner, ask them how difficult it was to start the
business. You are viewing them after years of success.
 How will the business affect your family?
 The first few years of business start-up can be hard on a family. It is
important for family members to know what to expect and for you to be
able to trust that they will support you during this time. Will your
involvement in family activities have to be curtailed?
Donegal Insurance Group 5
Southern Insurance Company of Virginia

6. Company Appointments
Insurance Agents need company appointments to represent insurance
companies and sell their products. New Agents often have difficulty
securing appointments because they can’t show a history of success in
the insurance business.
 What products will you offer?
 Which companies offer these products?
 What are the company requirements?
 Volume and Profitability of the business you send them
 Your Experience and strong financial backing
What if you can’t get appointed? Other sources:
 Networks/Aggregators
 “Big I” Markets (Independent Insurance Agents and Brokers Association)
Donegal Insurance Group 6
Southern Insurance Company of Virginia

7. Other Operational Needs
Errors and Omissions Coverage
 You will need a Professional Liability Insurance Policy (commonly
referred to as “Errors & Omissions”)
 There are several companies that offer this:
 Westport, Utica, Scottsdale, others
 The price you pay will be based on:
 Number of Years Licensed in Insurance
 Numbers of Years in the Insurance Business
 Agency Management Experience
 Estimated Gross Annual Premium
 As a startup you may be forced to seek coverage through an
“Excess and Surplus Lines Broker”
Training & Education Resources
 Independent Insurance Agents and Brokers Association
 Classes offered for each phase of your profession
 Online classes and Webinars
 Professional Designation Programs
 Professional Insurance Agents Association
 Professional Designation Programs
Donegal Insurance Group 7
Southern Insurance Company of Virginia

8. Have you decided to open an Independent Agency, but
you’d like some support?
Check out Donegal’s Agency Builder Program for Startup
Property & Casualty Agents
 Training & support – for Agent and their staff
 Financial Assistance
 Errors & Omissions coverage financing assistance
 Business support – business planning, coaching, management support
 Business Equipment and software with “800” number help
 Competitive personal and commercial lines products
 Lucrative commissions, bonuses and other incentives
 Co-op advertising, signs and marketing materials
www.donegalagencybuilder.com
Donegal Insurance Group 8
Southern Insurance Company of Virginia

9. THE REWARD
 Ownership of the policies is given to the Agent
 Any financing loans are waived
 All equipment becomes the property of the Agent
 The Agent becomes a Donegal Agent of Distinction with added
incentives
 Contact: Don Meincke, CIC, CPIA, LUTCF
Assistant Vice President
Southern Insurance Company of Virginia,
A member of the Donegal Group of Insurance Companies
donaldmeincke@donegalgroup.com
(800) 468-1127, Ext. 158
Look for me at LinkedIn: www.linkedin.com/in/meinckedon
Donegal Insurance Group 9
Southern Insurance Company of Virginia

10. THE REWARD
 Ownership of the policies is given to the Agent
 Any financing loans are waived
 All equipment becomes the property of the Agent
 The Agent becomes a Donegal Agent of Distinction with added
incentives
 Contact: Don Meincke, CIC, CPIA, LUTCF
Assistant Vice President
Southern Insurance Company of Virginia,
A member of the Donegal Group of Insurance Companies
donaldmeincke@donegalgroup.com
(800) 468-1127, Ext. 158
Look for me at LinkedIn: www.linkedin.com/in/meinckedon
Donegal Insurance Group 9
Southern Insurance Company of Virginia