Auto insurance agency is an interesting and lucrative business. In many countries auto insurance is even required by law. The potential of such business comes in the form of renewal commissions paid every year because a policyholder maintains the coverage. Time after time (as the number of policyholders increases) the renewal commissions can become very significant. Opening a new auto insurance business is a long and risky process but can prove to be well worth the effort.
Things You’ll Need:
• Property and casualty insurance license,
• Insurance carrier appointment forms.
Instructions
1. You should obtain your property and casualty insurance license. At first you must attend a training course from an approved educational institution, followed by an examination to demonstrate your comprehension and knowledge of state’s regulations.
2. You should buy an Errors & Omissions insurance policy. You’ll need protect themselves and the carriers they represent. Errors & Omissions insurance – E&O – will protect you when a customer wins a lawsuit against you wherein you are found guilty of a mistake involving the solicitation or sale of an insurance product. The E&O policy will pay all damages.
3. Decide which insurance companies you want to represent. Evaluate the companies that offer auto insurance in your state. Compare the general public’s opinion of these companies. You need to choose more responsible partners.
4. To start your business you should be appointed with insurance carriers. At first you must first receive the approval of the issuing insurance company. This is typically a simple process. Request the appointment paperwork from the carrier. Prepare full package of documents (with copy of your current insurance producer’s license, the declaration page from your E&O insurance policy) and return it to the carrier.
5. You’ll need an appropriate office to conduct your business and meet with clients. Find suitable office space that is in a highly visible and heavily traveled area. Offices on main roads or in the central part of the city is preferable, but they may also be too expensive.
6. An auto insurance business is impossible to do alone. As your business will grow, there will be a lot of clients and will arise a lot of different problems. Managing all these tasks, in addition to the main duties of owner of the small business, will be too hard. You should interview some potential candidates and hire the most acceptable of them.
7. You’ll see to market your new business. It cannot grow without advertising. Consider your marketing budget and think about different prospecting strategies. Look for highest likelihood of resulting in a number of new customers.
Tips & Warnings
• You should practice before opening your own business. You need experience. It’s a good idea to work an some agency for at least one year. It’ll help you to learn the probable ups and downs of owning your own company.
• You need some cash reserve which’ll help you to pay all of your bills for at least 6 months. This “financial cushion” is necessary during your first period while you wait for results.
