New Insurance Agents: Navigating The Road To Success In Home And Auto

Becoming a home and auto insurance agent can be a rewarding career choice, offering high earning potential, flexibility, and the opportunity to help protect the well-being and security of the public. To get started, new agents need to understand the core responsibilities, educational requirements, and licensing procedures for their state. While the specific requirements vary depending on the state, some general steps include earning a bachelor's degree, completing pre-licensing education, passing the state insurance licensing exam, and pursuing job opportunities with insurance companies or as an independent agent.

Captive vs. independent agents

When starting out as a new home and auto insurance agent, one of the key decisions you'll need to make is whether to become a captive or independent agent. This is an important distinction in the insurance industry and it can significantly impact your daily routine, the insurance policies you sell, and your income potential.

Captive Agents

Captive insurance agents, also known as exclusive insurance agents, work for and sell insurance policies for a single insurance company. They are typically under contract with an insurance carrier and receive a regular salary, plus commissions and benefits. One of the main advantages of being a captive agent is the support provided by the insurance company, which can include setting up an office, providing administrative staff, and referring potential clients. Captive agents also benefit from the broader marketing strategy and brand recognition of the parent company. Additionally, captive agents can streamline their processes and develop in-depth underwriting knowledge by working with a single carrier.

However, there are also disadvantages to being a captive agent. Since they are limited to selling policies from only one company, captive agents may have a narrower selection of insurance products to offer their clients. This can be challenging if the company's rates are not competitive. Captive agents typically earn lower commissions compared to independent agents, and their income may be more stable and consistent.

Independent Agents

On the other hand, independent insurance agents work with multiple insurance companies and can offer a wider range of insurance products to their clients. They have the flexibility to shop around for the best rates and policies to meet their clients' needs and budgets. Independent agents often function as small business owners, making all the decisions related to running their business. They usually take home a higher percentage of sales, earning commissions that may be significantly higher than those of captive agents.

However, there are also challenges to being an independent agent. They are generally responsible for paying their overhead costs, including startup costs, licensing, and marketing. Independent agents may also have limited access to certain companies and policies that are exclusive to captive agents.

In summary, both captive and independent insurance agents have their advantages and disadvantages. Captive agents benefit from the support and brand recognition of a single insurance company, while independent agents enjoy greater flexibility and the ability to offer a wider range of insurance products. Ultimately, the choice between becoming a captive or independent agent depends on your personal preferences, business goals, and the level of independence you desire.

State requirements

Education and Training:

Most states require pre-licensing education or training courses for insurance agents. The number of training hours varies, with some states mandating as little as 8 hours, while others require up to 50 or more hours of pre-licensing education. This training can be completed online or in-person and covers the fundamentals of insurance and specific lines of authority, such as life insurance, property insurance, and casualty insurance.

Examinations:

Passing a state insurance licensing exam is a standard requirement in all states. The exam assesses your knowledge of state insurance laws and insurance concepts specific to the type of insurance you intend to sell. Some states may require multiple exams for different lines of insurance, and the format is typically multiple-choice, with a time limit of around two hours.

Fingerprinting and Background Checks:

Many states mandate fingerprinting as part of the licensing process. Background checks are also standard, and some states may require applicants to submit to both state and FBI criminal history checks.

Age Requirement:

To become an insurance agent, you must be at least 18 years old, which is a standard requirement across the United States.

License Application:

Each state has its own license application process, typically involving an online application and a fee. The cost of the application can range from $30 to $200, depending on the state.

Continuing Education:

To maintain your license, most states require insurance agents to undertake continuing education or earn CE credits. This ensures that agents stay up-to-date with industry changes and maintain their knowledge and skills.

Resident and Non-Resident Requirements:

Lines of Authority:

Insurance agents must be licensed for each line of authority they intend to sell. Common lines of authority include life insurance, health insurance, property insurance, and casualty insurance. Some states offer bundling options, allowing agents to apply for a comprehensive license that covers multiple lines of authority.

Securities Licensing:

If you plan to work as a life insurance agent or financial advisor, you will need securities licensing in addition to your state insurance license. This is required for selling securities, and you may need to obtain the Series 6, Series 63, or Series 7 licenses, depending on your specific role and professional goals.

State-Specific Requirements:

While the above requirements are common across many states, it is essential to refer to your specific state's insurance department or licensing body for detailed information. Each state has unique procedures, and understanding your state's requirements is crucial before initiating the licensing process.

Becoming a licensed insurance agent involves understanding and fulfilling the requirements set by your state. By following the necessary steps, you can successfully enter the insurance industry and begin your career as an insurance agent.

Specialising in a type of insurance

Life Insurance

Specialising in life insurance involves selling policies and annuities that provide financial benefits to beneficiaries upon the death of the insured. This is an important form of coverage, particularly for those with financial dependents.

Health Insurance

Health insurance agents help individuals and businesses find plans that fit within their budgets. This may include selling medical, disability, Medicare supplement, and long-term care policies.

Property Insurance

Property insurance agents sell homeowner, commercial property, and inland marine policies. This type of insurance covers financial losses due to damage or theft of property, including homes, businesses, and personal belongings.

Casualty Insurance

Casualty insurance agents sell policies that cover a range of liabilities, such as auto, workers' compensation, crime coverage, and professional liability. This type of insurance is important for individuals and businesses to protect themselves from financial losses due to accidents, injuries, or legal claims.

Surplus Line Insurance

Surplus line insurance covers unique or unusual situations that are not typically covered by standard insurance policies. This could include daycare insurance, oil drilling rigs insurance, or special event coverage.

Personal Lines Insurance

Personal lines insurance agents sell policies directly to individual consumers, such as auto, homeowners, renters, and specialty insurance for items like boats, motorcycles, and snowmobiles.

Commercial Lines Insurance

Commercial lines insurance agents, on the other hand, work with businesses to provide coverage for their specific needs, including buildings, worker's compensation, and liability insurance.

When choosing your line of authority, consider your interests, the type of clients you want to work with, and the specific needs or risks you want to help insure against. You may also combine certain lines, such as property and casualty insurance, to offer a broader range of coverage to your clients.

Getting licensed

To sell insurance, you need to be licensed. The requirements for obtaining a license vary from state to state, but there are some general rules.

Firstly, you need to be at least 18 years old. You will also need to complete pre-licensing education, the requirements of which are determined by the state and the type of insurance you plan to sell. This will involve a certain number of classroom hours, which you may be able to complete through self-study. You will then need to pass a state insurance licensing exam. This will test your knowledge of state insurance laws and insurance concepts specific to the category of insurance you will be selling. You will also need to pass a background check, which may include fingerprinting.

To keep your license, you will need to undertake continuing education. This will be required to renew your license.

Networking

• Start with your inner circle: Your initial steps in networking should involve reaching out to family and friends. They can be a great source of new business and referrals. While your personal circle may be limited, it's a tried-and-true approach to building a solid foundation.
• Expand your network: Don't restrict yourself to people in finance-related fields. Everyone needs home, auto, and health insurance, so interact with people from various walks of life, like the barista at your coffee shop or the clerk at the grocery store.
• Connect with finance professionals: Target professionals like attorneys, accountants, or financial advisors who regularly discuss money and finance with their clients. They can be a great source of referrals. If seasoned professionals are already partnered with other agents, target newcomers in these fields, such as attorneys who've just passed the bar or accountants who've recently started their practice.
• Join referral and networking groups: Seek out formal networking groups, such as Business Networking International, or local groups in your area. These groups can be a fantastic way to connect with other business owners who can send business your way, especially if you're the first insurance agent to join.
• Utilize social media and the internet: Establish a strong online presence through social media platforms and a well-optimized website. While in-person networking is essential, supplementing it with digital networking can expand your reach and help you connect with a broader audience.
• Host events: Consider hosting events, such as casual get-togethers or parties, to meet new people and build relationships. Collaborating with another business owner to share expenses is a great way to manage costs. Keep the guest list small, and encourage invitees to bring a friend or family member to expand your network.
• Build relationships, not just connections: Networking is about building genuine relationships, not just collecting business cards. Follow up with the people you meet, whether through email, phone calls, or social media platforms like LinkedIn. Show genuine interest in them and provide value beyond just selling insurance.
• Be memorable: Stand out from the crowd with creative and memorable business cards. Put your photo on them, or add a funny sticker or stamp to make them unique.
• Set networking goals: Define measurable networking goals, such as adding new connections on LinkedIn, giving away a certain number of business cards, or sending follow-up emails to your contacts. These goals should focus on activities that lead to sales rather than the sales themselves.
• Be a connector: Introduce people to each other and facilitate connections. This will naturally position you as a person of influence within your community. The more people you connect, the higher your status will become.
• Attend events early: Arrive early at networking events to meet the organizers and help out. This can give you "connection power," and they might even give you a shout-out during the event.
• Avoid insurance talk: At networking events, refrain from discussing insurance, as it can be boring and may make you seem like a stereotypical insurance salesperson. Instead, focus on building relationships and finding common ground.
• Identify connectors: Look for individuals with high social influence at networking events and aim to connect with them. These are the people who know many others and can help expand your network exponentially.
• Be approachable: Don't take yourself too seriously at networking events. Relax, enjoy yourself, and show your fun side. People will be more inclined to approach you if you seem friendly and approachable.

Remember, networking is a long-term investment in your career. It takes time and effort, but it will pay off when you have a broad network of connections and referrals coming from various sources.

Frequently asked questions