Hello, this is Chris from Adelphia Insurance. I wanted to make a quick video on how to start an insurance company because this is a question that is frequently asked. If I had watched a video like this when I first started up my agency brokerage here, it’s likely that I would have speeded up the process and saved a lot of time. I hope that was helpful.
I’m going to try to keep it very, very straight to the point, so let’s get started. When I’m making this recommendation, you should avoid some of the mistakes I made and expedite the prospecting process instead of spending countless hours online as I did. It was just a rough, probably six-month period where I was just searching everywhere and couldn’t find anything.
First things first: An insurance company or carrier and an insurance brokerage or agency are not the same things. Consumers and customers often make this mistake, and the main difference is how an agency or brokerage does business.
It promotes insurance on behalf of insurance companies or carriers; Liberty Mutual Countrywide Progressive is an example of a carrier. In the event of an accident, fire, car life insurance, or anything else, all these large carriers with extraordinarily deep wallets are the ones who will pay out a claim; therefore, as an agent or broker, we conduct business with them.
I won’t discuss how to start an insurance carrier company because I’ve never done it and can’t speak on that. I’ve only started at a brokerage, and people also refer to it as a company because we are essentially a company. However, there are a few steps that I highly recommend, and these are necessary first.
First of all, I strongly suggest that you have some insurance experience before you start any kind of insurance business, whether it’s a carrier, company, agency, brokerage, or anything else. This could be in sales, customer service, or personal lines. Of all the business structure foundations, you need this to start an insurance agency or brokerage.
Commercial insurance, insurance The next thing I do think—no, I don’t think I know 100% you need this in order to sell insurance—is an insurance license. Make sure you’re up to date on all of your renewals. Whatever you know you’re doing, don’t go into it cold. You’re going to set yourself up for failure if you don’t know what you’re doing, or you’re going to set yourself up for a very bumpy ride.
In order to sell and conduct insurance legally, you must be licensed in the state where you are doing so. There are licenses for life and health insurance as well as PNC property and casualty, so once you have those licenses, you must set up an appointment with those companies, which is essentially a contract.
You must be able to enter into a contract with the insurance companies or businesses I mentioned earlier, including nationwide liberty triple a blah blah, stating that Chris will sell a policy and that Progressive or another party will pay him a commission. This appointment and contract, uh, you know, permit you to sell their products.
Products That’s a significant obstacle that many people encounter, so I won’t go into detail about how to obtain these appointments here. Instead, please contact me directly at the email listed below. I’ll be happy to discuss how to overcome that obstacle and how difficult it is to do so in general; however, I’ll do so in more detail in a later video.
A professional liability insurance policy, also known as an “errors in admissions policy,” is something else you should have. It essentially states that if Chris Constantini or Adelphia Insurance makes a mistake with your insurance, we will cover you for it if it is covered or if I am negligent and left something out or forgot to put it, etc.
The following step is clearance from the department of insurance if you need to change someone’s name or make a mistake with their policy’s name. In essence, this will provide me with insurance for the insurance agent’s error. Chris can legally sell insurance with that license number, but your license needs to be approved under your name.
The insurance department of the company charges about $80 for it. There is also something known as a business entity insurance license. For instance, Adelphia Insurance Services LLC holds my insurance license, and I am a producer under that specific business entity license. Adelphia Insurance is the one who is actually selling the policy; I am merely the producer.
You should get in touch with the department of insurance because they will be able to explain that there is an application. I believe the business entity is a little bit more expensive, so look into that. You could also need to obtain a broker bond.
The Department of Insurance should also be consulted to determine the requirements for your particular state. Finally, and perhaps most importantly, have patience. For the first six months after launching my agency, I had no idea what I was doing. I’m grateful to everyone who offered support; I’m now almost three years in and I know I’m doing something right.
I definitely know what I’m doing now, but the first six months were really difficult. I struggled a lot, didn’t sell a lot, and was instead trying to establish relationships and figure out structural issues of this nature. I hope you watch some of the videos because I hope some of them are helpful to you and help you understand your process.
I’m not making this stuff up; I’m actually doing it, and I’m saying it because I want to give people as much value as possible and help you guys succeed a little bit faster than I do. So, yeah, if you have any questions about business entity-related matters or how to start a real business—let’s say it’s not in the insurance industry—visit legalzoom.com.
I’m not a lawyer, so anything I say here is just based on my experience and what I did. If you want advice on what to do or what kind of corporation or sole proprietorship to form, you should speak to a professional. You should get a sole proprietorship business license, an LLC, or a corporation set up so that you can conduct business legally.
But as far as an insurance agency is concerned, those are kind of the structural things you might need. Always check with your department of insurance to see what is needed, and hopefully, that was helpful. If you did get any value, guys, please let me know. A business lawyer or someone who is in at Legal Zoom should talk to them; they’ll handle everything for you; it’s super cheap; it’s easy, and they’ll help you get your stuff going. But as far as an insurance agency is concerned,
I’d really appreciate it if you could like and subscribe, and I’ll keep making these videos in the hopes that they’ll help clarify some of the concepts that were confusing to me when I first started and get you moving in the right direction. You can also contact me via email if you need coaching or consulting, and I’ll be happy to jump on a call for you guys right away.
Keep up the good effort, everyone, and we’ll catch up with you soon when you reach the top. peace