In the last decade, the industry for insurance agencies has made a lot of progress. With the invention of insurance technology, it has become relatively easy for people to start up their own businesses.
According to the Insurance Information Institute, as of 2019, there were a total of 5,965 insurance carriers in the U.S. In the last decade, many agents are moving away from a traditionalist approach to a more modern one. With technologies such as cloud computing and blockchain, the expenses of running an insurance agency have reduced drastically. This makes it easier for agents to work independently and provide more client-centered approaches.
Are you looking to start your own insurance agency? Here are seven things you should keep in mind before you invest.
Commitment to Your Insurance Agency
First things first, starting your own business requires more commitment than having a regular 9-to-5 job. Forbes says that 87% of employees expect their employer to support them in balancing work and personal commitments. When starting your own insurance agency, you are going to be liable for all your actions and motivations.
Before you make a huge investment and start your own company, make sure you reflect on how committed you are to the idea and how much you are willing to sacrifice for it. Starting any business takes capital, but more importantly a lot of time. Without having commitment, you cannot make your plan work.
Risk Assessment of Starting an Insurance Agency
Starting a business has high risks, but it also has high rewards. Many businesses don’t even make profits their first year. A small business is considered to be doing well if they break even their first year.
There are many risks of starting your own insurance agency. One of them is not having enough savings to sustain yourself in the beginning. Another risk can be your ability to attract carriers to partner up with you. Lastly, the main risk is seeing if your sales and marketing skills are able to translate into enough income when actually put into practice.
As a founder, you need to be cognizant of all the learnings you are going to have to do while starting your journey. You will be in charge of most of the things and primarily, it’s going to be managing your firm.
Getting Familiar with Insurtech
Insuretech is the technological innovation designed to increase efficiency of the insurance world. Insurance agencies are adapting to the digital boom the world has been seeing since the last decade. With all the new technology strides made in the industry, expenses have been cut down drastically. Some notable inventions in Insurtech are cloud computing, blockchain and cybersecurity. According to Business Wire the global insurtech market is expected to see the growth of 41% by the year 2023. Insuretech is exploring different avenues of insurance agencies and it would be sensible for you to get familiar with it.
Having access to the market you are trying to sell in is crucial. As a newbie, it can be difficult for you to get direct access to the market. You are likely to come across a lot of brokers and general agents who will try to get a part of your commission.
While this doesn’t sound ideal, it can be considered as a general norm. Once you have established your insurance agency, you can work towards marketing your brand image and get direct access to bigger companies.
Your Insurance Agency Sales
As someone who has been working in the sales business, you must have heard the saying “Sales is a Numbers Game”. This statement is partly true, but it oversimplifies the process of making a sale.
While it’s possible that with a powerful pitch, you can sell items to at least five out of the ten people you talk to, it doesn’t work that well with insurance products. When running an insurance agency, your top priorities in numbers should be on your conversion rate.
Sales is actually a conversion game. Reaching out to a big crowd doesn’t automatically mean that you are a good salesperson. Converting your potential client to an insured is what actually makes you a great salesperson.
Creating a Valuable Customer Experience for All Your Clients
Customer experience is a top priority for most businesses these days. According to Super Office, many businesses have started to prioritize customer experiences for an increase in their profits. Satisfied customers are likely to stay loyal as well as refer your insurance agency to other people.
One great way to maintain great relationships with insurance buyers. is by sending them occasional cards or a surprise them with a bag of cookies after a sale. Research has found that 84% of companies that worked to enhance their customer experience saw an increase in revenue. If you are starting a new journey, make sure you invest enough time, energy, and resources to make your customers’ experience positive.
Insurance Agency Management
One of the main things you need to keep in mind when starting your own insurance agency is that you’re the one taking all the financial decisions. You need to make sure that you have enough funds to employ people.
You need to be critical as well as thorough of the people you hire when you start your own business. This is just one aspect of management. Other aspects include things such as budget management, maintaining confidentiality, keeping up with competitors and so on.
According to the Insurance Information Institute, as of 2018, there were about 36,500 independent insurance agencies operating in the U.S. If you are planning to go independent as well, then go in with your eyes open and know that the market for it is quite tough. Although it is not unattainable to be an independent agent, you should slow down and do your research thoroughly before starting.
Need an expert to give you advice on how to start your own insurance agency? Let us know in the comments below!
February 12th, 2023 · 8 mins read
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