How to Become an Independent Insurance Company

 

Many insurance agents work on a commission Become an Independent Insurance Agency Owner Portland basis, relying on sales and policy renewals to maintain annual income resources. With so much work put into finding and keeping clients, successful agents and brokers can benefit from going out on their own. Transitioning into opening your own independent insurance company may have additional overhead, but the profit margin is worth it for many producers. Every state has its own regulations and you may need to file paperwork and pay fees for more than one location.

Write a business plan and develop your course of action that leads to sales. If you have already been in the insurance industry for a while, this business plan should integrate capturing existing clients without violating employer's non-complete clauses and gathering new clients. Focus the type of insurance you will sell, choosing between life, health, auto and home, or some other specialty insurance.

 

Establish a business entity in the state in which you intend to do business or call your home base. Go to the Secretary of State's website to establish either a limited liability company or a corporation to reduce personal liability against potential lawsuits.

Get a tax identification number, also known as an employer identification number, from the Internal Revenue Service by calling 800-829-4933. Complete the phone application to obtain the EIN as quickly as possible.

 

Call the offices of or visit the website of the state insurance commissioner. Many commissioners have online applications; others may need to send you a package. Be sure the application is for a business. Do this for any state in which you wish to do business.

 

Get the appropriate licenses for both yourself and your business. If you already have a state insurance license, you will only need to obtain the business license. If you don't have a license, you will need to take and pass the state insurance licensing exam and pay all fees associated with licensure. Fees vary from state to state.

 

Complete all fingerprinting, bonding and personal history as part of the application process. Failure to include all previous employers, residential history, financial and criminal issues can result in a rejection of your license application. Should you have a bankruptcy or were convicted of any crime, disclose the issue in your application with an explanation of the circumstances to improve your chances of approval.

 

Submit all forms to the state insurance commissioner for approval. Do not conduct any solicitations or business until you receive your confirmation.

 

Contact insurance underwriting companies to become appointed to offer policies through them. As an insurance company, you are not underwriting the policies; you are a broker shopping client needs for the best policy.

How do I Open an Insurance Business?

You can start some businesses on a shoestring and little more than a dream, but starting an insurance company requires more. You need a license to run your own insurance agency, and you have to operate within state regulations. You must also convince insurers that you're the right person to sell their policies. That's on top of all the traditional business skills and requirements you need to meet.

Tip

You need to take classes for each insurance line you want to sell – property, health or life insurance – and then pass an insurance exam. Each line requires a separate exam. Then, convince insurers that your agency should be selling their policies.

 

Before Starting an Insurance Company

The Independent Insurance Agents & Brokers of America website says that you need a license no matter which state you operate in. Before starting an insurance company, research your state licensing requirements. This requires knowing what sort of insurance you want to sell, as different insurance lines require different licenses.