Starting An Insurance Agency As A Captive Agent

Dreaming of starting your own agency? One of the biggest choices you’ll have to make during your earliest planning phase is whether you’d like to operate as an independent or a captive agent.

Previously, we wrote down the steps you’ll need to follow to start your own independent agency. However, if you choose to be a captive agent, your experience will likely be very different! The steps are similar—licensing, funding, training, setting milestones, etc.—but the support you receive from a carrier can make a world of difference in your ultimate outcomes versus going independent.

Below, we’ll talk about what you can expect if you choose to open an agency under the umbrella of a captive insurance carrier such as Farmer’s, Geico, or Allstate.

Already opened the doors on your new agency? Start bringing in clients right away with warm leads and inbound calls from EverQuote.

What is it like to start an agency as a captive agent?

1. You’ll need to obtain licensing, funding, and perhaps office space.

First things first: You can’t begin selling insurance until you get licensed in your state for the type of insurance you’d like to sell. This means you’ll need to study up and take an exam before you can realistically do much else.

Once you get your license, you can work toward funding your agency. Some carriers provide advance business loans for captive agents, which function almost like any other business loan. You’ll need to have a solid business plan in place before you apply.

Finally, you’ll need a place to actually work. Whereas some independent agents operate mostly online, captive agents typically have physical offices where they meet with customers.

Your carrier may help with startup expenses and office setup—and in some cases, you may apply for an opening at a location that’s already up and running. Or, it may be up to you to choose the perfect spot and secure the funds to rent it. If the cost of office space is a major limitation, consider working primarily out of your home office or a coworking space until you can reinvest enough capital to open a physical location.

2. When it comes to licensing, go broad.

A lot of “how-to” resources advise new agents to only get licensed in home and auto insurance. The theory is that these policies are far easier to sell; everyone needs them, therefore the market is vast.

However, why limit yourself before you’ve even begun? Go ahead and get licensed to sell life and health insurance while you’re already studying and scheduling exams.

It’s true that you’ll want to start with selling home and auto insurance because it’s far, far easier than the life and health side. But once you have a foot in the door with your clients, your book of business has grown, your confidence is higher, and you start to consider ways to drive in more revenue, you’ll find yourself wanting the ability to sell additional policies to your existing customers. When that day comes, you’ll be thankful you obtained all the licensing necessary to expand into these other areas.

Start working life and health insurance into your conversations with your home and auto customers, and you might be surprised how willing many people are to buy additional policies from someone they already know and trust.

3. Choose your carrier wisely.

When it comes to setting brand new agents up for success, not all carriers are created equally. That’s not to say you can’t be successful regardless of the carrier you choose—you absolutely can—it’s just that some carriers provide more hand holding, guidance, and rules than others.

If you’re the type of person who wants a strong safety net and lots of training, it’s good to understand that you want that ahead of time so you can apply to a carrier that fits your needs. In fact, looking for a carrier that takes an interest in how its agents run their businesses is a great way to minimize your failure rate and get a running start with lots of training, oversight, and methodical formulas for success.

On the other hand, some people are more suited to forging their own paths without a lot of oversight. Choosing one of the carriers that doesn't take a “hands-on” approach can be a happy medium between being a fully independent agent with zero help and being an agent under the wing of a carrier with plenty of guidelines and regulations.

4. Plan plenty of time for training.

Depending on the carrier you choose, your training will be quite different. If you opt for a carrier that offers very little training, you might have to find courses and study on your own time.

Other carriers conduct in-depth meetings with pay bonuses for each milestone you meet.

Regardless of the structure of your training, the process will take time. Don’t expect to jump into selling right away—you’ll have to get up to speed before you start writing policies for customers.

5. Hire producers—and expect to keep hiring them.

Think of your producers as the engines that will keep your business chugging along every day. If you’re ready to hire staff to expand your agency beyond your own capabilities, one of the best investments you can make is to hire qualified, capable producers.

Save hiring for other positions such as an office manager for later on, when your business has become so large that you’re having trouble running it by yourself.

One problem many new agents face is the surprising amount of turnover with producers they’ve hired. Some people take on the job not knowing what to expect and then leave after a short time, whereas others must be let go if they wind up costing you more money than they bring in. Understand this ahead of time, so you can get an ongoing hiring process in place and always keep your office staffed and ready to go.

6. Expect the going to be tough for a while.

If starting your own business were easy, everyone would do it. Truthfully, if you want to be successful at any business, you’re going to have to put your shoulders down and grind through some difficult months—or years—where the work seems endless.

If you look up industry statistics, you’ll see scary figures that claim anywhere between 50-80% of new agents are doomed to fail for one reason or another. Thankfully, these figures take the average failure rate of all new insurance agents lumped together. Independent agents have zero support and must pave their own paths, so they likely account for some of the higher numbers you’ll find during your research. Captive agents, on the other hand, have the support and training of their carrier, and are therefore more likely to succeed.

This is one huge mark in favor of opting to be a captive agent rather than an independent—at least until you learn the industry ropes. Agents with America’s largest captive carrier, for example, boast a pretty low failure rate of less than 20%, according to experienced agent Chandler Hahn.

Your path forward still won’t be easy, but you can at least put effort into building your business with reasonable confidence that your hard work will pay off in the long run.

In general, expect the first year to be a grind. After two or three years, you may begin turning a profit once policy renewals start rolling over. After that point, the sky is your limit.

7. Surround yourself with successful agents.

“If you want to be a millionaire, keep five millionaires as your friends. You’ll be the sixth.”

This is a modern take on the old adage about how you are the company you keep, but it holds true in the insurance industry as much as it does in all other aspects of life.

Interact with successful agents as much as possible, and you’ll inevitably pick up on some of their expertise, methodology, and positive energy.

8. Measure your milestones.

Your carrier may put certain goals in place—make X number of sales or hit Y revenue by a certain date, for example—or it may not. Even if you’re in charge of your own goal setting, it’s a good idea to track metrics such as your close rate, your customer numbers, and your revenue, for starters. These numbers will tell you if your business is growing or if it may be time to try something else.

9. Keep your eyes on the prize, but be honest with yourself.

Successful insurance agents can pull in huge incomes once their businesses take off. An experienced agent can make as much as a doctor or a lawyer, or even more if they want to hustle for it.

However, this level of success isn’t necessarily easy to attain. While you’re setting milestones you’d like to hit, also set limits for bare minimums you’re not willing to fall below.

Many agents get drawn in by the promise of high payoffs and burn through all their investment capital only to find that the sales aren’t where they need to be to continue running the business. This is a huge mistake, but usually it’s an avoidable one.

Resist the temptation to let the possibility of big dollar signs in the future guide your business decisions today. Focus on how to make your business the best it can be right now, and you’ll have a better chance of getting to your ultimate destination.

10. Keep your client pipeline full.

At first—before you make a name for yourself—you might experience dry periods where not much is going on and the phones just aren’t ringing. Rather than twiddling your thumbs and worrying about making the rent payment on your office next month, build up your pipeline with leads from a lead company like EverQuote.

EverQuote can send you warm leads from customers who have expressed interest in purchasing insurance, so you can reach out and make contact on your own time. Or, have the customers reach out to you when they’re ready to buy with our consumer-initiated inbound calls service.

Just let us know when you’re ready to start growing your business.