How to Start a Small Insurance Business

By Jay P. Whickson

  • Overview

    Starting a small insurance business requires perseverance and dedication. You have to get used to rejection and find methods of marketing that suit you and the clientele you hope to procure. Once you get your business started, if you take care of your customers, your prospecting will be easier and your business will grow.
    Starting a small agency doesn't require a lot of equipment or a fancy office.
    • Step 1

      Establish the type of insurance you want to sell and get a license in that area. Many people that choose insurance for a career get all four licenses right away: property, casualty, life and health. Often companies offer a variety of products. If you decide to sell disability insurance, you find that life insurance compliments it and brings in additional cash.
    • Step 2

      Clear out an area of your home for an office. Have your computer and printer in that area. You'll also need a copier and a file cabinet. You'll need to keep good records for your small insurance business, and the computer is the easiest way to do it. Most companies use their websites for information on policies and commissions. Often you'll find that you can enter the client information online and start the underwriting immediately. Keep a separate log for the distance you drive for business. The first stop of the day doesn't count for taxes, so make it close.


    • Step 3

      Decide the best method of reaching people. If you select telephone canvassing, make sure you have the "do not call list" available. Many companies offer leads for you to follow if you sign on as their independent agent. You can work for several different companies at one time as long as you aren't a captive agent with any of them. Before you sign on the line, ask if you're captive--it means you work only for them.
    • Step 4

      Arrange for a premium account or ask that clients make all checks to the insuring company. Many agents find themselves in trouble when they commingle premium funds with their own, so make sure the money is separate from your own. Don't deposit it into your personal checking account and expect to write the company a check, and never accept cash.
    • Step 5

      Make copies of everything. You'll need to keep this in a customer file. On the inside of the file, record all calls and visits with the customer. If you discussed any concerns, note those. If the customer wants something you don't recommend, put that in the notation and ask them to initial it. Later, if your concerns prove true and the customer is unhappy, you have a record that you didn't recommend the move.
    • Step 6

      Find a fact-finding form. Some people create their own form, but there's no reason to reinvent the wheel. Most companies offer a form you use to learn more about the clients. When you fill it out, you have all the information you need to complete an application, so the process goes smoothly. Practice filling out an application before you sit down with a client.
    • Step 7

      Set a schedule every day for different areas of the business. Prospecting for new clients is the primary job initially, but later, you'll need to make scheduled calls on your clients. Make sure that you designate several times per day to return phone calls. Use a schedule C to report the income and expenses on your taxes after you start you small insurance business.
    • Skill: Moderate

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