10 Steps to Start An Agency

Starting an independent insurance agency can seem like a daunting task.  Where do I begin?  How do I get licensed, find insurance companies to represent, open an office, and hire people?  If you are reading this, it means you are considering embarking on this journey.  While there are many challenges that will face you there are also many rewards that will await you, such as the ability to call your own shots, a healthy return on investment in the form of owner’s equity and the satisfaction of being in a business that protects people and their valuables.  

As the philosopher Confucius said:  “A journey of 1,000 miles begins with a single step”.  We hope that you will use the following ten steps to assist you in your journey to opening your own Independent Insurance Agency.


How to get started

Laying the Groundwork

A. Establish a realistic timeline.  
Starting an agency will take time.  How long depends on your situation and how much time you have to work on it.  It almost always takes more time than you think it will.  Expect at least six months to arrange financing and two weeks to obtain E&O Insurance. 

B. Obtain qualified legal advice.  
This is necessary if you’re in a current relationship that may involve a non-compete agreement or other contractual issues.

C. Find out what is required to open a business in North Carolina.  
The University of North Carolina’s Small Business and Technology Development Center (SBTC) has published an outstanding resource guide that explains in a comprehensive way what is needed to open your own business in NC.  We have provided a link to this document.

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Five things every business plan should address
Create the Business Plan

We will not bore you with the “not planning is planning to fail” lecture, but just about every industry relationship you need will require a formal business plan.  The business plan consists of a narrative, resumes and several financial worksheets.  The five things every business plan should address are:

A.  People
At its core, the fundamental value of an agency is in the capability of its people to execute its objectives.  Therefore, your business plan should include information about the people who are responsible to execute it.  At a minimum, include resumes of each of the key players that describe the professional and personal background relevant to the agency business as well as the knowledge, skills and abilities possessed by each.  For start-ups, a lack of demonstrated track record may inhibit your ability to attract prospective employees, customers and carriers.  To mitigate this uncertainty, include an explanation of who you know and how you may be known in the community and/or industry.

B. The Opportunity
A key to agency success and of interest to all current and potential stakeholders is how the agency plans to acquire customers, including competitors.  This section should demonstrate that you know who your customer is, what your products and services are and how you will position your products and services to be selected over those of your competitors.

C. The Business Environment
Your business plan should demonstrate that you have a keen awareness of the external business environment in which you operate, that you understand its impact on your business prospects and how you will navigate and exploit it.  The discussion should encompass regulation, the economy, labor supply, customer markets, suppliers, competitors and in what way the status of these factors is relevant to the operation of your agency.

D.  The Risks
Many business plans, especially those that will be used outside the agency to attract stakeholders, often make the mistake of painting only a rosy picture; however, risk is inevitable.  The best business plan readily identifies and confronts the risks to be faced.  Potential stakeholders, especially prospective carriers, will develop confidence in those agencies that pose the risks and provide strategies to resolve them.

E.  The Numbers
You need to have realistic expectations of where revenues will come from and when and how cash will be used; furthermore, insurance carriers will be interested in growth projections.  At a minimum, you should have a start-up budget, a cash flow forecast and a production forecast. 

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Meet the legal criteria

Meet Legal Criteria

A.  Obtain Licenses
For sole proprietorships, Property and Casualty licenses are issued to the individual.  For partnerships and corporations, the entity must have a separate license filed with the NCDOI. 

B.  Choose an Entity 
There are three broad categories to investigate when determining your business organization: sole proprietorships, partnerships and corporations.  While sole proprietorships are the least expensive and easiest to create, they carry a risk of personal liability for the owners.  Partnerships and corporations can afford further protection for the owners, but require more paperwork and expense to create.

C. Sole Proprietorships and Partnerships - Assumed Name Act
If you decide that your company will be a sole proprietorship or partnership, and you wish to use a  name other than your own name, you must perform a name search at the County Register of Deeds to see if the name of your company is already being used. To access a list of the Register of Deeds for NC counties, click here.

D. Obtain IRS ID
The IRS requires a Taxpayer Identification Number for all entities.  This number is used in the administration of tax laws.  If your agency is organized ad a sole proprietorship, your social security number is your tax identification number.  If your agency is organized as a partnership or corporation, you are given a Federal Employer Identification Number (FEIN).

E.  Join IIANC
The association is here to help our members succeed.  IIANC offers support through education, insurance market placement, technical and HR advice, governmental advocacy and agency management support.

F.  Apply for E&O
Prior to being appointed with an insurance company, you should get Agents Errors and Omissions coverage.  When completing an E&O application for the new independent agency, include information on any business you are bringing with you or use estimations and predictions of the business you plan to write over the next 12 months. The E&O carriers will also require a business plan and resume.  Since this is a new agency, they will not have the history on the books to underwrite, so they will underwrite you, as the owner, and your goals for the agency.  One of the benefits of IIANC membership is that you have access to E&O coverage at a reduced cost.

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IRS Guidelines for Tax forms and Filings:


Secure Direct Appointments and Indirect Markets

Secure Market Commitments

Direct appointments with a variety of established carriers that have broad, competitive insurance products to offer is the ideal situation – and very hard to come by unless you have at least a three-year track record and a sizable book of business that you will bring to the table right off the bat.  For most start-ups, market commitments will have to come from a combination of a few possible direct appointments and/or a variety of indirect markets such as wholesalers, managing general agencies and market aggregators.

A. Direct Appointments
IIANC’s company appointment guide lists many of the insurance companies that operate through the independent agency system; however, most will only appoint agents who have some sort of established track record and/or are located in selected marketing territories.  As an IIANC member, you also are a member of the Independent Insurance Agents & Brokers of American, giving you access to top-rated carriers with low/no volume commitments.  You also have access to the Big I Flood Program through Selective Insurance Company.

B. MGA’s/Wholesalers
Many Managing General Agents and wholesalers are receptive to working with new agents.  Many will have little or no volume commitments and are compensated per transaction through policy fees that are passed on to the customer.  The North Carolina Surplus Lines Association has information and links to its member MGA’s and wholesalers.

C. Market Aggregators
Market aggregators provide assistance to new agents in setting up their first agency office, access to otherwise unattainable markets and niche programs, the opportunity to obtain direct company appointments and a chance to share in the network’s profitability.  In return, these networks usually ask agents to pay a percentage of commission, a membership fee, or require them to give up a small stake in the value of the book of business built up through the aggregator.  Be sure to review the contractual relationship with these entities carefully, especially as they relate to book ownership, commission or revenue sharing and exit costs.

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Framework for the Necessary Business Processes

Choosing an Agency Management System

A fundamental building block for today’s successful Independent insurance agency is a good agency management system that provides a framework for all the necessary business processes. The most effective agencies have maximized the ability to operate as digitally as possible, minimizing double entry and handling paper.  Agency management software can range in cost from less than $1,000 to $5,000 for a start up operation with monthly fees of $60 to $600. It is advised that a new agency should not skimp on agency management software since it will pay in the long run to operate as electronically and efficiently as possible. With this is in mind you want to make sure the system “fits” your agency. When you join IIANC you will also become a member of the Independent Insurance Agents and Brokers of America (IIABA) They sponsor an organization made up of independent agencies, carriers and technology vendors called the Agents Council on Technology (ACT). The ACT website has numerous resources to help agencies. You will find vendor comparisons for both hardware and software and checklists to be used in making your decisions. This will help maximize productivity and profitability. Examples of information provided through ACT are:

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Develop a written procedures manual

Establish Workflow Processes and Loss Control Procedures

It is estimated that one in five agents will be involved in an E&O claim during their career. One of the best ways to avoid this exposure is to create and develop a written procedures manual. The procedures should be adhered to by all employees. You must create “THE AGENCY WAY”. This document should be concise and adaptable to meet the market and client demands, but should also establish some structures guidelines to enforce the way you want your business handled.

In addition to procedures for Errors & Omissions Loss Control, agencies will be wise to have written workflows of the agencies processes. These will enable you to assess where you are as well as where you are going in the automated world. Best Practices will provide self assessment tools to give you a base from where to start as well as instruction on how to get to the next step.

The information provided by ACT and the Best Practices will give an agency the tools to develop their own manuals to protect and lead the agency into developing procedures to protect from unnecessary errors and omissions claims. From the links below, you will find these websites provide numerous articles and checklists.

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Technical and Management

Obtain Additional Training – Technical, Management, and Industry

Depending on your level of industry experience, or your level of expertise in the various lines of business you intend to offer, IIANC and the Independent Insurance Agents and Brokers of America offer a broad array of training resources and career paths to fit your needs. We will be glad to answer any questions you might have regarding your Pre-Licensing or continuing education needs. Classes are provided both in house and in classroom and in addition we offer online CE through ABEN and webinars. 

Once you become licensed you will be required to complete 24 hours of Continuing Education every two years.  Your two-year biennium is based on your birth month and year. IIANC offers our members an opportunity not only to complete these required hours, but also to obtain professional designations in the process. Listed below are some of these designation programs as well as links to IIANC’s other award-winning education programs.

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Professional Designation Programs:


Whether you need staff immediately or later, you will find the agency in need of additional help. Recruiting the right talent for the right position is not easy; however, we offer several tools to help in this effort. When needing job descriptions or professional assistance in your recruiting efforts, the following sites should assist you.

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You may be an independent agent, but you aren't alone!


Membership in the Independent Insurance Agents of North Carolina offers the new agent not only access to Errors and Omissions coverage. our market access programs and a variety of other member benefits and services, but it also makes you a part of a family of other Independent Agents throughout the state. You have access to our knowledgeable and helpful staff as resource for business management, technical or other insurance/agency related questions.  

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STEP 10: Networking

Develop the relationships you need to be successful.


Get Involved in Your Local Community

Agents who have successfully started a new business will tell you that it is important to become involved in your local community. This can be done in a variety of ways:  through membership in your local Chamber of Commerce, by joining a civic organization such as Rotary or Jaycees or by becoming active in your place of worship. Insurance is a relationship business, and building relationships in your local community can be a factor in the success of your new agency.

Use the Internet and Social Media to Enhance Your Agency’s Visibility to Others
You will need to develop a website for your agency since the majority of insurance consumer's today begin their search for insurance on the Internet. IIANC has a recommended vendor for high quality, affordable website development and hosting.  Once you have built a website for your agency, you should also consider incorporating social media and digital advertising into your overall marketing strategy to enhance your agency’s online and in visibility in your local community. 

One advantage of your membership in IIANC and Trusted Choice is that you may take advantage of the participation on www.TrustedChoice.com, which is exclusive to Big "I" members. On www.TrustedChoice.com, consumers can search for local independent agents in their area and also begin the online quoting process, which can drive additional business to YOU. TrustedChoice.com also offers digital marketing resources for agencies looking to expand their Internet presence through social media and their websites. There are several different packages with varying levels of service and benefits. 

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