Transitioning from a captive insurance agent (working for a single insurance carrier, such as State Farm) to an independent one (free to write with any carriers you’re appointed with) can be an exciting opportunity that opens new doors and paves the way for agency growth. At the same time, it’s a major shift in paradigm, and it can be daunting to know where to start and how to navigate such a big change.
HawkSoft’s Insurance Perspectives Podcast recently did a five-part series interviewing agents that made the switch from captive to independent. Here’s what agents said about the benefits of moving to the independent channel, and some recommendations they gave on setting yourself up for a successful transition.
In this article
Agents featured in the podcast and article
Click below to watch each agent's podcast episode
For the agents we spoke to, working in a captive environment was a great way for them to learn the insurance business while receiving a high level of training, support, and resources from the carrier. It let them start a business “out of the box,” with many of the business decisions already made for them. “The captive channel does a really good job of training and equipping on the basics of insurance,” James says, “for anyone who is new to insurance or running a business. You’re probably going to get a better training experience there than you will with any independent carrier.”
So why make the switch? Agents said they went independent because they wanted more control and freedom in running their agency, and wanted to be able to offer more options and freedom to their clients too. “The consumer deserves choice,” Ron says. “I think the independent agency system is what’s best for the customer. If you’re locked down to one carrier, that limits how you can help your clients.”
“Once you see how the independent channel works and the close rate and the opportunities, it’s hard to go back. It’s kind of like putting toothpaste back in a tube – you can’t do it.”
- James Jenkins, Riskwell
That said, starting an independent agency isn’t easy, and it isn’t for everyone. Here’s what agents mentioned as the pros and cons of both channels, which might be helpful if you’re considering whether going independent is the right choice for you.
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It’s easy to get overwhelmed with the to-do’s when starting an independent agency. Here are the top things agents suggested focusing on during the transition that will make the biggest impact on your business.
The most critical thing a new independent agency needs are appointments to write with carriers. This is a new experience for agents coming from the captive world, who only had a single carrier to manage, with an agreement already in place. For an independent agency, you’ll need appointments with a number of carriers, and you’ll need to learn the differences in how all of them write business.
“In the captive environment,” John says, “you know how they operate and their claims system and their underwriting system. But with independent, not all carriers are the same. The biggest culture shock I found was knowing all the companies, knowing all their underwriting and their contracts.”
Niki points out that as an independent agent, you need to have a better understanding of the state laws, not just the carrier’s standards. “You’re learning the insurance rules and regulations in general, so you can apply them to each carrier and their underwriting guidelines.”
To get appointments, independent agencies can either join a network organization (also known as clusters, alliances, or aggregators) that provides access to carriers for members, or seek appointments with carriers on an individual basis. See our blog on obtaining carrier appointments for more details on each of these options.
One thing many agencies noted they missed when making the move to independent was the resources, training, and support they received as a captive agency. “I would encourage everyone not to do this alone,” Ciara says. “It’s too hard to do it alone. There are communities for everyone in this space.” There are a number of ways independent agencies can find resources and communities to help them succeed.
Agency networks or clusters, as mentioned earlier, often provide agencies with resources, training, and education programs in addition to carrier access. Many have programs especially for agencies starting from scratch or coming from captive environments.
Associations with state or regional chapters, like Big I or PIA, can also provide a host of helpful resources around state-specific issues. You can also join agent-led groups or forums, such as ones for agency owners or for specific topics or lines of business. These groups often have social media pages where agents can quickly ask questions and get responses or ideas from other agents.
“Connecting with an industry group is not an option, it’s a must- do. They have resources that can answer your questions quickly or help guide you in the right direction.”
- Ron Keats, Keats Insurance Agencies
“I definitely recommend finding other agents in your same situation,” Nikki says. “If you’re leaving Farmers, go find other Farmers agents that are now independent. It has been essential for me to find those connections. If I have a question, I can pick up the phone and ask, ‘What carriers are you using for this? What are you doing on this commercial policy?’ I don’t think I would have come this far without those connections.”
Ron also recommends joining referral groups, such as BNI, to get leads from related businesses like banks, real estate, car dealerships, and more. “The idea is everyone comes to the group and brings a certain amount of referrals,” he says. “Insurance is great for these groups because not everyone needs every type of business in the group, but everyone needs insurance.”
Ciara recommends taking some time to get insurance designations or certifications (such as CIC – Certified Insurance Counselor). When you’re independent and no longer have a well-known brand backing you, these designations help earn the trust of clients and prove that you have education in your field. “Those letters behind your name, even if people don’t know what it means, they know you’ve dedicated time,” she says, noting that it also helped her build her expertise and have more confidence to go after larger accounts.
In addition to groups, several agents shared it’s helpful to have a one-on-one relationship with an experienced mentor. “I encourage everybody to get a mentor as quick as possible and to pick the right one,” Ciara says. “I really do feel that I wouldn't be here still if it wasn't for finding the right mentor.”
She observes that it’s equally important to be a good mentee by dedicating time to it and committing to being open to listening to your mentor and making changes when needed. “If you’re going to get a mentor, you’re investing your time and you’re taking their time, so be serious about it. You’re going to be told some things that maybe you’re not ready to hear, or that you need to change. Be willing to accept the help and implement what they tell you – otherwise what’s the point of reaching out for their help?”
One of the other new areas for an agency moving to the independent space to navigate is being responsible for all their own technology solutions. This encompasses tools like VoIP solutions for phone calls, a management system for organizing clients and policies, a rater for quoting, and much more.
John recommends implementing a management system first and supplementing it with automation technology to handle tedious manual labor, noting that his agency wasn’t able to grow until they had the technology in place to free up time for new clients.
At the same time, agents warn not to go overboard with technology that your agency may not really need yet. “Instead of just saying, this new thing looks cool,” Niki says, “I try not to bring new technologies on unless it’s an actual problem we’re having that needs to be solved."
“You can bury yourself in tech expenses pretty quickly, and end up with a bunch of stuff you’re not using. I keep a list of the things that I want to try and review it annually.”
- Niki Henley, Extra Mile Insurance Solutions
John adds that you may have to step back and be willing to cut your losses if a tool isn’t working. “The technology may be cool, but will it make money? Learn how to step away. I got a little carried away with tech at times and there were things we had to pull back and let go because it wasn’t a good fit for our agency.”
Staffing can be difficult for new agencies at the start. Ciara mentions that it’s challenging to hire employees at the beginning before you have much cash flow. This can result in hiring staff with less experience, who then require more time to train. “I got stuck in this training loop where I’m constantly training new people, and I’m not able to sell, and then staff ends up leaving and I’m back to training. It took a while to get my staff where I needed it to be.”
Ron feels the most important first hires are an admin or CSR to handle calls, and a dedicated producer (aside from you) to sell policies. You can scale up gradually from there as needed. “When you own an agency,” he says, “the problem is time. You need to delegate. You can’t sell insurance and build your business. It’s the old adage, don’t work in your business, work on your business. It took me a long time to establish that fully, but every time we hired another employee, we grew.”
If your agency doesn’t have the resources for a full-time employee yet, you may want to look into starting with a virtual assistant (VA), who can be trained and implemented quickly, and contracted for only a certain amount of hours a week or month. See our blog on achieving success with a VA for more info on selecting and implementing a VA.
While being independent opens your client base considerably and provides more options, it’s still important to understand your agency’s value proposition differentiate yourself from the competition. “On the captive side you think, if only I had options I wouldn’t lose this client,” Ciara says. “But that’s false—at our independent agency we still lose clients. You still have to show value – having options is not the only thing people are looking for.”
James recommends spending time to identify your agency’s vision, brand, and customer base. “You’ve got to figure out what your identity is, because the marketplace has never been more crowded with options that all look and sound the same.”
Ciara suggests focusing on a niche as early as possible, which will help differentiate your agency and identify a solid customer base. “Focus on an industry line of business and become known in that industry as the expert,” she suggests. “Be published in their magazines, go to their conferences.”
“Be willing to say no to things that don’t fit your focus. Who makes more money, a generalist or a heart surgeon? It’s no different in insurance.”
- Ciara Gravier, The Bunker Insurance and Risk Management
Making the transition from captive to independent can be intimidating, but don’t feel like you have to know everything before taking the leap – most things will come with experience. For the easiest transition, agents suggest either partnering with an organization (like a network) that can guide you through the process, or starting out by working at an independent agency for a few years to learn the ropes before striking out on your own.
Don’t wait for the “perfect” time to make the transition, Ciara says, even if the market is hard at the moment. “If you feel like it’s the right time for you, just go for it,” she says. “It’s never going to be easy. The challenges are always going to be there. But if it feels like the right direction for you, you’ll make it work. It’s difficult, but you don’t have to do it alone. If anyone feels alone, we haven’t done our job as independent agents, which is protecting the community.”
Ron adds that the independent agent community is open to sharing knowledge and helping others. “None of us have a monopoly on brains,” he says. “Find your people and share. Work together, get ideas, and don’t try to do it alone. Try to give more than you get, because you’ll end up getting more than you give. That’s the best advice I could possibly pass on.”
Learn more: tips on getting carrier appointmentsSee our article on recommendations for getting carrier appointments and maintaining your relationships with carriers. |