The benefits of breaking free as an independent insurance agent
Despite the current hard-market challenges, now may be the perfect time to become an independent insurance agent.
Are you considering becoming an independent insurance agent?
Despite the current hard-market challenges, now may be the perfect time. With factors such as surging inflation and a higher frequency of natural disasters, insurance premiums are on the rise. Higher premiums cause an increase in prospective clients seeking better deals, providing new agencies an opportunity to outperform the established ones, which are mainly focused on renewals without certainty of their future outcomes.
As revenue decreases for insurance carriers in this harsh market, they are more open to collaborations with different agencies to boost their sales. This opens another door for new agencies to partner with carriers they wouldn’t normally have access to so they can provide better coverage options and offer the most competitive prices to their clients.
All these factors can contribute to taking the leap and becoming your own boss. However, if you are considering becoming an independent agent, there is a lot to think about.
To help you with your decision, here are the benefits of branching out on your own as an independent agent:
Increased product and carrier options
With the flexibility to work with multiple insurance carriers, your independent agency would be able to offer clients a wider range of insurance products. This flexibility enables you to better tailor coverage to the specific needs of individual clients. Whereas captive agents are limited to the products offered by their parent company.
Higher earnings potential
As an independent agent, you can earn higher commissions and bonuses because you would often have more control over your pricing and underwriting. You would be able to receive commissions from multiple carriers, leading to more income opportunities.
Greater client retention
You would be able to offer clients a broader selection of insurance solutions, creating a better opportunity to find a policy that suits your client’s needs. You can also move clients from one carrier to another if their needs change, which can mean retaining clients you may have lost as a captive agent.
Improved flexibility and autonomy
Making the choice to become an independent agent can mean you enjoy more freedom and flexibility at work with the ability to set your own schedule and make your own business decisions and marketing strategies.
Freedom to customize your tech stack
As an independent agent, you can select the tools that best suit your business model, objectives, workflows, and unique needs. You get the flexibility and power to choose the latest, most efficient, and effective tools in the tech market — from management systems, comparative rating tools to other solutions that can help you gain a competitive edge and improve your service to clients.
Business growth opportunities
The ability to bring on other agents and form partnerships with other agencies means independent agencies can grow and expand their businesses. This scalability can lead to a more substantial and profitable operation.
Reduced risk of company changes
Since you wouldn’t be tied to a parent company’s policy options and strategies, you wouldn’t be subject to changes and mandates from above that could affect your book of business.
Access to a broader market
With more freedom to market to a broad client base across geographic areas, you can reach and win over more customers than captive agents. As an independent agent, you can market yourself to a broader customer base and geographic area, creating more opportunities to win new clients.
Market resilience
With more opportunities to offer diverse products from a wide range of carriers, independent agencies have a better chance of withstanding economic downturns. You can adapt to and manage changes in the marketplace more readily, ensuring business continuity regardless of market trends.
From increased profit opportunities to greater autonomy and flexibility, becoming an independent insurance agent offers many benefits. If you are thinking of launching your own business, I hope this helps you decide what your next step in your insurance career will be.
Vijay Rengarajan is the director of product management at EZLynx, an Applied company. His passion is delighting customers with intuitive products that drive efficiency and growth for agencies. Rengarajan holds an MBA from Texas A&M International University, with a specialization in strategic management and he holds his Chartered Property Casualty Underwriter designation. He is an innovative strategist and effective product leader with over 16 years of experience in product management in the IT industry and property/casualty insurance domain.
This commentary is published with the author’s permission; these opinions are the author’s own.
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