Start a Small Insurance Business

When you want to start your own insurance agency, you have several options. You can open an office where clients come in for appointments or to purchase insurance or have an office where you keep records. If you start an agency with storefront office, you'll have all the extra work and expense of creating the office. If you sell property and casualty insurance, you generally need an office and the process is more difficult. However, a small insurance business that sells individual life insurance, annuities, some employee benefits or health insurance doesn't have to be that complicated.

I was in the insurance and investment industry for almost 30 years and saw many successful representatives start with nothing more than a dream, their car, good study habits and excellent work ethics. A small insurance business doesn't require a lot of money, particularly if you begin it in your home. You need all the equipment that you'd have for a regular office but a few additional items are required.

Insurance license

Office, in either the home or commercial building

Trust account

Business plan

Computer

Fax

Printer

File Cabinet

Desk

Paper

Insurance carriers

File folder

Fact finder

Vehicle

Form a business plan. If it's just for your eyes and not a loan, it can be as simple as putting your marketing plan on paper. You need to include the type of people you want, the products you'll sell, and how you'll prospect for business. Your business plan is like a roadmap. You need to know where you're going before you start the journey.

Decide on the type of insurance you'll sell and make sure you have all the appropriate licenses. If you sell variable products, you'll not only need to pass the insurance exams but also need to pass the SEC exams. You also need to identify the customer base that you want to prospect. Check into the prices of E&O, errors and omissions, insurance for your business. Many life and health independents don't open a storefront immediately. If you do, check your local requirements to see if you need a specific business license.

Stop at the bank and open a premium trust account. It's against the law to commingle business operating or personal funds with insurance premiums paid by clients. You'll also need to find companies that have products you like. You need to license with them to write their portfolio of products. If you're an independent, get contracted with several companies. Consider choosing one as a primary company and they often give you financial aid to help you get started.

Make space in your home for an office or rent a small area at a commercial area for walk-in business. You'll need a computer, printer, copier and a file cabinet. You'll need the computer, if for no other reason, to get into the websites of the companies whose products you sell. Keep a mileage log for taxes.

Create a filing system and record keeping method. You'll need to make a copy of everything that you do and good notes about the conversations between you and the client. These notes are particularly helpful if the client wants something you wouldn't recommend for them. Have the clients sign those notes. If you have a storefront office, anyone that works with client questions needs a license.

Use an industry standard fact-finding form. Most companies have forms for you to collect data and some of them have computer programs to use the data you collected. As you ask the questions and fill the forms with the client information, you find that it contains almost all the same questions you have to ask for the application. Read it thoroughly and practice using it before you meet with your first client.

Track your progress. Winners keep score. Keep records of your suspects who are on your list of people to contact, prospects, interviews and sales. Use them to see how many suspects you need to get a prospect, how many prospects for an interview and finally how many interviews for a sale. It shows you where you're weak and need to improve. It also helps you formulate the number of calls or suspects you need for a sale. Tracking progress gives you a lot of information about which prospecting methods work the best so you become more