Establishing and running an insurance agency is a highly profitable venture, thanks to its consistent demand. It is also a great avenue for recurring revenue and can provide the financial security and stability you require in a career. Once you decide the type of insurance product you are going to offer, it’s time to look into the finer details.
According to black entrepreneurs in the field, starting an insurance agency requires motivation, discipline, focus, and resilience. You don’t need to have experience in the field as long as you are willing to learn, network, and have mentors to guide you. Below are a few considerations you need to make before starting an insurance agency.
Required Capital and Funding
Before starting any business, you must research about how much it will cost to establish and run it. This not only includes the initial costs for setting up such as licensing fees and equipment, but also recurring expenses such as rent, technology, legal costs, and insurance. If you have no experience in the field, you should also include training and testing costs.
Once you have an idea of how much capital you need, you can take a business loan as long as you have a business plan, work experience, and a good credit history. You should also consider crowdfunding and grants to help fund your business. You can also seek financial aid and additional support from organizations like the NAAIA Foundation, which provides resources for black entrepreneurs starting out in the industry, as well as funding for progams that help African Americans get started in insurance and financial services.
You can’t start and run an insurance agency without meeting all the license requirements. Usually, the license requirements will depend on the state you plan to operate from. In most states, you must possess insurance education of at least 20-40 hours, and 12 hours of ethics education to take a licensing exam.
Once you finish your studies, you have to take a licensing exam and pass it so you can begin operations. Fortunately, you can find the courses online, although they are not free.
Appointment with Insurance Carriers
You have to be appointed by insurance carriers before you can start offering your insurance services to your clients. When choosing a carrier, ensure they meet the requirements for agencies, such as minimum production.
To secure an appointment, you should have your license, business plan, and errors and omissions coverage. You should also be ready to sign numerous agreements and contracts with your carrier once you get the appointment. Remember to always read everything carefully before signing, and ask for clarification whenever necessary.
Although starting an insurance agency as a black entrepreneur can be rocky in the beginning, you can count on the NAAIA Foundation to hold your hand through the journey.