Starting a scratch insurance agency is a daunting proposition. With no existing book of business, a new agency holds little appeal to many carriers. New agency owners face two challenges – landing customers while also seeking carriers to place them with. The solution for increasing numbers of new agencies? Agency networks.
Many former captive agents would have been hesitant to start their own independent agencies without networks behind them. Heidi Brown, principal of a young Oklahoma agency and a former captive agent, says that it would have been “too overwhelming” to start an agency without her network, Premier Group Insurance (PGI). Dawn Koehler, a Pennsylvania agent and member of Insurance Pro Agencies (IPA), echoes that. “I would have been lost trying to pick the right carrier,” she says, “and the up-front funds needed would have been more than I could afford.”
Agents uniformly pointed to the difficulty attracting carriers as a major reason for joining a network. Todd Pancratz, a PGI agent from Colorado, says the network gave him instant access to ten carriers. Alabama agent Sam Compton believes it would have taken him two or three years in business to land some of the carriers that PGI made available to him immediately. Koehler says she would have been limited in the products she could have offered without the network.
In addition to providing access to carriers, networks provide sound business advice. Marsha Poindexter of Missouri credits IPA for her entry into the personal lines market, saying she would have stuck to commercial lines without their support. Brown says PGI’s commercial team offers advice on who the right carriers are for clients. Compton says PGI helped him with their carriers’ unique products. Koehler adds, “They advised the best carriers for my area, even ones they do not work with, if it fit my needs.”
Former captive agents who are now running their own businesses have a thousand questions. The best networks are there to provide answers. Pancratz says there are many deals he would have lost without the instant access to help that PGI provides. Poindexter says IPA provided tips for every day from day one to day sixty. “They were easy to follow and learn how to do,” she says.
Brown admits she was floundering when she first opened her agency. She visited PGI’s headquarters and they helped her set a direction. “They worked with me on a game plan,” she says. “I don’t know where I’d be without them.”
That knowledge does not just come from headquarters. Koehler says that IPA periodically asks its agents for advice on how to succeed and shares the answers with the other members. “I have not one time in almost four years felt like I was alone in this venture,” she says.
Networks provide support in other ways. Pancratz said PGI helped him set up his agency management system and got him access to additional automation. Brown received discounts on the cost of building a website and access to affordable errors and omissions insurance. Compton valued the training he received on new systems. Discounts on the cost of management systems were also common.
The difference between life as a captive agent and as an independent is vast, but those who have made the switch seem happy with the decision. “I wish I’d gone independent ten years ago,” says Pancratz. Brown says she loses less business and wins more as an independent. “The customers are more concerned with service, not with the brand name,” she says.
The ability to offer multiple carriers rather than one was the biggest advantage cited by agents. As Poindexter said, “We have all the markets available and they only have one.” Koehler likes having more to offer clients. “I close each prospect/client meeting knowing I did what was right for that client, not what was best for the carrier or myself,” she says. Pancratz left his captive company in part because he wanted to offer his clients a choice.
For brand new agencies, networks offer many advantages. They provide access to markets that would otherwise be closed, expert advice, and savings on startup costs. As more captive companies allow their agencies to go independent, these agencies may find that joining an agency network makes sense for their businesses.