Strategies To Become A Successful Insurance Marketing Organization

An Insurance Marketing Organization (IMO) acts as an intermediary between insurance agents and carriers, facilitating the marketing and distribution of insurance products. They provide support, resources, and a platform for agents to navigate the intricate insurance industry. IMOs are established by independent life insurance agents, who can then access the insurance carrier's brand name, products, and expertise.

To start an IMO, you must decide on a line of insurance, obtain an agency license in your state, establish an office, obtain an agency contract with insurance carriers, and get errors-and-omissions insurance.

It is also important to note that most insurance carriers require agents to work through an IMO, so you will likely need to partner with one. When choosing an IMO, consider their reputation, track record, and the services they offer.

Identify the market and choose a line of insurance

The first step in starting an insurance marketing organization is to identify your target market and choose a line of insurance to focus on. This is a crucial step as it will determine the type of insurance products you will be offering and the clients you will be targeting. There are two main types of insurance: insurance for individuals and insurance for businesses.

Personal lines insurance

Personal lines insurance covers individuals against loss resulting from death, injury, or loss of property. It includes products such as homeowners insurance, earthquake insurance, renters insurance, automobile insurance, life insurance, disability insurance, umbrella insurance, and health insurance. When choosing a line of insurance within the personal category, consider the needs of your target market and the types of risks they face. For example, if your target market is families, you may want to focus on homeowners insurance, life insurance, or health insurance.

Commercial lines insurance

Commercial lines insurance, on the other hand, provides coverage to businesses and other enterprises against losses they may not be able to cover on their own. This includes commercial property insurance, commercial auto insurance, casualty insurance, and medical malpractice insurance. When choosing a line of insurance within the commercial category, consider the specific risks faced by different types of businesses. For instance, a restaurant may need insurance to cover damage or injury resulting from cooking with a deep fryer, while an auto dealer would require coverage for test drives.

Specialty insurance

In addition to the main types of insurance, there are also specialty insurance policies available for very specific needs, such as kidnap and ransom, medical malpractice, and professional liability insurance. When choosing a specialty line of insurance, it is important to thoroughly research the needs of potential clients and the types of risks they face.

Once you have identified your target market and chosen a line of insurance, you can move on to the next step of starting your insurance marketing organization, which is meeting the legal requirements and obtaining the necessary licenses.

Obtain an agency license in your state

To obtain an agency license in your state, you must appoint a general manager and obtain an agency license specific to your state and line of insurance. Each state has different requirements for licensing, so it is important to contact your state department of insurance regulation or the National Association of Insurance Commissioners for information specific to your state.

The insurance industry is primarily regulated by state insurance commissioners, not federal officials. This means that the requirements for obtaining an agency license may vary depending on your location. It is essential to familiarise yourself with the regulations in your state to ensure compliance.

When starting a new agency, it is also crucial to establish an office that meets the necessary standards. This includes having a secure place to store client files, reliable phone lines, and internet access. Compliance officials may need to access your office at any time, so be prepared for their visits.

Establish an office

Establishing an office is a crucial step in starting an independent insurance marketing organization. While you may start with a home office, be prepared to transition to a more formal office space as your business grows. Here are some key considerations for setting up your office:

• Compliance and Security: You should be prepared for compliance officials to inspect your office at any time. Ensure that you have a secure place to store client files, preferably behind at least two locks. This is crucial as these files often contain sensitive personally identifiable information, and accidental leaks can result in significant fines and potential violations of federal laws.
• Equipment: Equip your office with essential tools such as a copier, scanner, reliable phone lines, and fast internet access. These tools will help you efficiently process business and maintain smooth operations.
• Location: When establishing your office, consider a location that is easily accessible to your clients and agents. As your business grows, you may want to move from a home office to a more prominent location, such as a storefront or business suite.
• Flexibility: Be prepared to adapt your office setup as your business evolves. You may start with a small team and gradually expand, requiring more office space and resources.
• Professionalism: Your office should project a professional image to clients and partners. This includes having a dedicated space for meetings and ensuring that your office is well-maintained and organised.

Obtain an agency contract with insurance carriers

Obtaining an agency contract with insurance carriers is a crucial step in establishing your insurance marketing organisation. Here are some detailed instructions to guide you through the process:

Identify the Type of Insurance Carrier

Firstly, identify the type of insurance carrier you want to represent. You can choose to focus on insurers that offer life, health, disability, and long-term care policies for individuals or groups. Alternatively, you may opt for property and casualty insurance, including auto, home, fire, or flood insurance. It's essential to match your chosen insurance line with your target market to attract potential clients effectively.

Contact the Insurance Carrier

Once you've decided on the type of insurance carrier, reach out to them and request their New Agent Contracting and Appointment kit. This kit will provide you with the necessary information to understand their products, services, processes, and rules. It will help you effectively represent the carrier and ensure compliance with their requirements.

Complete the Appointment Paperwork

After receiving the kit, carefully review and complete the appointment paperwork. This paperwork typically includes questions about your background, banking information for commission payments, credit history, and criminal record. Don't forget to attach the required documents, such as proof of Errors and Omissions insurance, your insurance license, and a W-9 form for tax purposes.

Understand the Difference Between Contracting and Appointment

It's important to understand the distinction between "carrier contract" and "carrier appointment." A carrier contract involves selecting the states and products you'll sell and signing an agreement with the carrier or field marketing organisation (FMO). On the other hand, a carrier appointment occurs when the carrier finalises your contracting paperwork and issues you a writing number, authorising you to sell their products.

Be Prepared for Potential Costs

Keep in mind that there may be costs associated with the contracting process, such as state appointment fees. These fees can vary, and some carriers may require upfront payment, while others will deduct the fee from your first commission.

Understand the Importance of Carrier Appointments

Selling insurance requires more than just a license; you must also be appointed by the carriers to offer their products. As an agent, you represent the carrier's brand and are legally responsible for conducting due diligence on behalf of your clients. Understanding this responsibility is crucial, as you may be held liable for any mistakes made in the process.

Seek Assistance from a General Agency (GA)

If you're affiliated with a general agency (GA), they can act as your liaison and provide valuable assistance in getting appointed with multiple insurance carriers. Their role is to work on your behalf and facilitate the process of contracting with insurance carriers.

Be Mindful of Penalties

Remember that there are severe penalties if you solicit or attempt to service policies from carriers with whom you are not contracted. Always ensure you have the necessary appointments in place before offering or servicing any insurance products.

Get errors-and-omissions insurance

Errors-and-omissions insurance, also known as professional liability insurance or media liability insurance, is a type of liability insurance that covers claims against your business for mistakes you made or services you failed to provide. It protects your business from claims by clients for negligence, malpractice, errors, or omissions you allegedly made while providing a professional service.

Any business that offers professional services or advice should consider getting E&O insurance. This includes insurance agents, doctors, lawyers, wedding planners, and financial advisors.

E&O insurance doesn't cover claims related to property damage, bodily injury, workplace injuries, data breaches, intellectual property violations, or criminal acts such as fraud.

• Protection Against Claims: E&O insurance protects your IMO from financial loss due to claims made by unsatisfied customers. It covers mistakes, oversights, misinterpretations, or other inaccuracies made by professionals in your organization.
• Allegations of Negligence: E&O insurance covers allegations of negligence in performing your duties, even if you haven't made a mistake. It can help with legal fees, compensation, and damages if you are found at fault.
• Required by Clients: Some clients may require you to have E&O insurance before they agree to work with you. It provides them with peace of mind and assures them that they are protected in case any issues arise.
• Compliance and Risk Management: E&O insurance is an important aspect of compliance and risk management for your organization. It helps safeguard your business from legal issues and potential challenges.
• Protection for Agents: E&O insurance protects the agents working for your IMO. It covers any errors or omissions they may be accused of, providing them with peace of mind and confidence in their work.
• Long-Term Sustainability: By having E&O insurance, you can focus on growing your business without the constant worry of potential lawsuits or liabilities. It helps ensure the long-term sustainability and success of your IMO.

When choosing an E&O insurance policy, consider the coverage limits and costs. The amount of coverage you need will depend on the nature of your business and the potential risks. Additionally, review the policy carefully to understand what is covered and what exclusions may apply.

By obtaining errors-and-omissions insurance, you can protect your insurance marketing organization from potential financial losses, legal issues, and reputational damage. It is an important step in establishing a successful and sustainable IMO.

Frequently asked questions