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Getting Appointed as an Insurance Agent

Tags: , Agents

Now that you're licensed as a Texas insurance agent, what’s next?  Obtaining the license is only first step in your insurance career.   If you’re newly licensed, you’ll find it difficult to get appointed as a new agent.  The best way to entering the insurance business is to get going and get experienced.  Since there are so many different distribution methods, it’s best to take a look at the three main methods in which most insurance is sold.

Direct Writer  – Insurance Company Employee

A direct writer is an insurance agent that works for one company and is involved in their selling system.  Generally, these type of agents earn a base salary (and production bonuses)  through call center distribution centers.  Renewal commissions are not paid to the agent.  Instead, the agent earns salary increases based on their results.  The insurance company owns the clients sold by a writing agent.  Become a direct writer is a good position for someone new to insurance and lacks the experience or funds to become purchase an agency or start one on their own.  Examples of direct writers include; Progressive, Geico, Liberty Mutual, USAA, and 21st Century

Captive Insurance Agent – Independent Employee  Agent

A Captive agent is one that represents one company.  Generally, this type of agent can offer several different products under one company’s umbrella.  Captive agents are generally compensated by commission and other bonuses for writing profitable business that stays with a  company from year to year.  The captive agent usually specializes in auto and home insurance but they may offer a limited number of life insurance and business insurance products.  Ownership of the client base varies based on the agent’s contract with the insurance company.   Generally, these types ofcompanies require a large capital investment for things like purchasing a client book and location from a former agent, opening new offices, marketing, etc.  Because of the large capital investment needed to become a captive agent, these companies tend to have high quality training programs.  In essence, the agent buys the business with his initial capital investment. Examples of companies with captive agents include: State Farm, Allstate, Farmers, and Nationwide.

Independent Insurance Agent

Independent insurance agents and brokers come in  all shapes and sizes.  These agents offer different products from different companies.  Becoming  authorized as an independent agent can be rather difficult if you have little or no experience.  Some companies will offer appointments to virtually every agent that applies to become an agent while others will want to know more information about your background, experience and business plan.  Many independent agents have production goals.  As a result, many agents join clusters, aggregators, and MGAs to avoid production goals; in exchange for reduced compensation and service.  Generally, captive agents become independent agents after transitioning from being a captive agent.  Compensation for independent agents simple, commission and bonuses.  Examples of companies that use independent agents include: Travelers, The Hartford, Liberty Mutual, Progressive, and Kemper.  Commissions tend to be higher for independent agents because  the companies know independent agents can place business with any carrier they are authorized to sell.  The independent agent owns his clients.

Ultimately, You decide your path

There are pros and cons to each agent type.  The Direct Writer of a base salary offers the ultimate security of a base salary and home office training, while limiting the agent’s ultimate earning power.  On the other hand, having a big name like State Farm or Allstate combined with all the structure, training, and support that goes with a  large company can make becoming an insurance agent much easier.  However paying for your own expenses and  only representing one company and requiring large initial investments could make the life of the captive agent difficult during tough markets.  Ultimately, the independent insurance agent presents the agent with the option of selling any and every product available on the market without exception.  Companies like Liberty Mutual, Allstate, and Farmers write business through independent and captive agents alike.  Commissions and bonuses are available to agents of all types.  Ultimately, you must decide which route to becoming an agent is best for you.  Whether you want to start as a direct writer or captive agent and transition to becoming independent the choice is yours.

About David Berry

David Berry is a Texas Independent Insurance Agent that specializes in finding ways to save his clients money on their auto, home, life, and business insurance. His extensive experience stems from over 15 years in the insurance, finance, and real estate industries. David has held management, sales, and marketing positions with companies including Hilton Reservations, GEICO, Liberty Mutual, and Allstate. To schedule a free insurance consultation, call TXINSURANCEPRO.COM at 214-717-4326.

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  • Katie

    Hello, David
    I just got my license and I would like to open my own agency in Dallas, TX. Can you help?

  • Laura

    Hey David! Thank you for all this information! I want to open an small insurance agency in Texas. However, I can’t find any information on how to get appointed with insurance carries, do you know a website that I can submit an application? thanks!!

    • Hi Laura, Thanks for your email. Your question is the question of the year. Starting an independent requires one of _____ approaches. 1. You can call each carrier 1 by 1 and apply for appointments individually. 2. You can join an agency group or team that will sponsor you into a number of carriers. or 3. You can use some sort of aggregator that provides quotes & service in exchange for some type of fee. Each has it’s pro’s and cons. I’ll try to break down each as easily and as succinctly as possible.

      1. Individual Appointments
      This is perhaps the most difficult method. As a new agent, you’ll need to prove that you can produce an acceptable level and quality of insurance. Each carrier has a different appetite. For instance, ACCC may drivers with a suspended license, while Safeco rejects those types of drivers. Understanding the subtleties makes a huge difference. As a result, it is more difficult for the inexperience agent.

      2. Agency Group
      This perhaps the easiest way to get started. Most agency groups require experience in personal or commercial lines prior to taking the plunge. If you’re looking for a way to learn different carriers, this is probably the only way. I work with a small agency group that signs up newer agents with at least 2 years experience with a carrier like Farmers, State Farm, or even Liberty Mutual. So, if you’re interested in something like that, let let me know.

      3. Aggregators
      Aggregators sole job is to sign up agency forces for insurance carriers. Much like option 1, this requires you apply individually and setup your own company structure. While this can be slightly easier to get into the agency game, the recruiters in these organizations look for experienced agents are making the transition from a captive company like Farmers, Allstate or Nationwide.

      Perhaps this website can one day become the one stop recruiting and training source for independent agents. If it does, I’ll let you know. If you have any other questions, feel free to let me know. Also, if you want to discuss working with my agent and agency buddies, let me know. They are always looking to open new locations in Texas.
      Good Luck in your endeavors!

  • Cyrus

    Hi David,
    Happy new year and thank you for your helpful blog. I am an experienced businessman and I do have the funds to start my own independent insurance agency. I would like to start such an agency offering property and casualty and life and health mostly for small businesses, say those with less than 20 employees and I would like to do that in the DC and its surrounding area of Maryland. How do you suggest I acquire the needed appointments with some top companies without having to become a member of those insurance aggregates? Would you please offer some right on target advice on that issue? Thank you and all the best to you.

    • Cyrus
      How did you find me? If you’re looking to start a business and target businesses in Maryland, I’m uncertain if I can help you. I’ve only had a non-resident license in the state of Maryland. Therefore, my knowledge is limited. If you’re focused on life and health only, I may be able to get you connected with one of my broker dealers agencies. They have the national footprint you need to begin selling health and life insurance to small businesses. As far as getting directly appointed, new agents have to partner with a company or agency to help point them in the right direction. If you’re licensed, I can introduce you to someone that may be able to help. Otherwise, you should start by getting a license. I can help by providing you and your employees a platform to help you pass Maryland’s life & health licensing exam.

      If you’re looking for property & casualty, you can give up trying to get direct appointments. P&C is much more difficult due to the various policy types. New agents without experience very rarely have what carriers are looking for in order to get directly appointed. P&C has a lot of moving parts and relatively low commission. If this is the way you want to go (and you have funds to invest) I suggest you talk to Allstate, Farmers, or Nationwide. That way you can get the training you need to startup a P&C agency. They provide direct appointments, training, and proven systems that you can use for you and your employees.

      Thanks for reaching out!
      David Berry