This week we decided to cover a relatively broad small business sector – the insurance industry. Now, the insurance industry is a heavily regulated, slightly complex field to work in. There are tons of hoops that independent agents and brokers have to jump through before they are even allowed to open their doors.
How do you get started in the insurance industry?
Insurance is a regulated field, which means you need to be licensed before you can begin. You also usually have to take some sort of course as well before the state will issue you your license. There are normally a few, different types of licenses you can apply for – property & casualty, personal lines, and life are the most popular. If you form a business entity, like an LLC or Corporation, you’ll need entity licensing as well. It’s highly recommended that you file for an Errors & Omissions insurance policy to protect you, just in case an error or omission causes significant loss to your clients. It is very hard for new agents to qualify for E&O insurance, so it’s a good idea to get a few years of experience first under another agent before branching out on your own.
And, on top of all of that, you’ll need to file the usual paperwork to start any kind of business – at the very least that means applying for permits, local licensing, a DBA, and an EIN.
Do you need to form an LLC or incorporate?
A lot of insurance industry experts recommend that you do. For one, it limits your personal liability for any debts or lawsuits stemming from the business. But, for another, it allows you to apply for entity licensing. And, as silly as it sounds, customers seem to prefer buying insurance from agencies with names like ‘Jane Doe Insurance Services,’ over a name like ‘Jane Doe, Insurance Agent.’
Is the insurance industry healthy?
Heavy regulations mean the barriers to entry are pretty high, so there aren’t a ton of independent insurance agents. Insurance is also seen as a necessity by most people, so the market is certainly healthy. However, there are a few, corporate insurance agencies that operate through independent agents – companies like State Farm or Allstate – that you will have to compete with. Further, it can be difficult to build your book of business when you are first starting out. It’s always a good idea to build your experience, and connections, under someone else before branching out on your own.
Interested in starting a business in the insurance agency? Need some help? Give us a call at 1-877-692-6772!
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