Once you have decided that a career as a professional Property/Casualty Insurance Agent is what you would like to pursue, just how do you go about accomplishing that? The following steps are required:
• Obtain a Property/ Casualty agent/Broker license. Insurance is state regulated so you will need to get your license from the state in which you reside. There are schools specifically geared toward providing the continuing education hours required to get your license. They also usually have preparation classes specifically for taking the test and offer continuing education that is required to renew your license every two years. Most classes are available online.
• Become educated in the insurance business. Some universities offer degrees in insurance but they still tend to be somewhat rare. Insurance carriers used to offer training for insurance agents but that is not as prevalent as it once was. Insurance agencies will sometimes hire inexperienced folks but the training may be haphazard. If a carrier or local Insurance Professionals offer a “Producer School,” this can give you a very good basic education while gaining experience.
• Determine how to gain access to markets. There are several options:
o Join an existing independent agency as a “Producer”. The agency will manage the business, give you access to markets and provide office space with possibly clerical support. Typically you do not “own” your business.
o Join an “Aggregator.” These are operations with access to markets which would allow you to operate as your own business but rarely give you direct access to markets or binding authority. (Binding authority allows you to provide coverage without conferring with the carrier first.)Typically you do not “own” your business.
o Join a “Cluster.” These are agencies that work together to pool their business to create a bigger “presence” with a carrier. This allows them to optimize growth and volume bonuses. This is usually not an option for a new agency.
o Join a “Captive.” These are insurance carriers that hire agents to represent them. They provide infrastructure to manage your business but the inflexibility of representing just one market. You may or may not receive renewal commission. You may or may not have “binding authority.” You may or may not “own” your business.
o Open your own “Independent Agency.” “Preferred” Insurance carriers look for a minimum of 3 years loss ratio experience to consider “appointing” an agency. “Standard” markets can be easier to get appointed with. Optimally, you will want to build your business with “preferred” markets to earn bonuses and for your business to have a much higher value if you want to sell it at some point.
o Join a “Hybrid” organization. These agencies provide infrastructure to manage your business and direct access to carriers. They typically allow you to operate as an independent entity but pools business to maximize bonuses. They give direct access to carriers they represent and allow ownership of business.
All of these options have varying commission levels and/ or fees. They will also require that you sign contracts. These contracts vary wildly so it is imperative that you read and compare contracts before you sign.
• Learn how to sell. Selling Property/ Casualty insurance is unlike any other type of sale. You are not selling a tangible object. You are selling various contracts that promise to perform when there is a loss. The public does not understand insurance. Whether they realize it or not, they need professional advice in most situations to identify their best solution. This is a sale based on educating the client and listening to their needs. We call this “needs” selling or “consultative” sales. Professional Insurance Agents put the needs of the client before their own. They leave the “hard” sell to people selling other types of products.
That’s it! Do your homework and you will have a very lucrative and fulfilling career in front of you.