Transitioning from Captive to Independent Insurance Agent: What to Ask Before You Leap

Taking the leap from a captive insurance agent to an independent insurance agent can be exciting. It can also be nerve-wracking, scary and anxiety-filled. 

While the possibilities are truly endless as an independent agent, you will no longer have the stability that working for a large insurance carrier brings. Instead of collecting a base salary and commission with all the support of your agency, you’ll be a small business owner building your company from the ground-up. 

Of course, there are many benefits to being an independent agent, including the freedom to run your own business and the nearly limitless income you can generate. 

Before you decide to make the transition from a captive to independent agent, though, there are some things you should know and questions you should ask yourself.  

We’ll detail some of those below. 

Are You Ready to Make the Leap? 

Independent agents carry a lot of weight on their shoulders. They must make all the decisions for their business, and they must face the pressure of closing enough deals to generate sufficient income. 

So, the first question you need to ask yourself is whether you’re prepared to make the leap. 

Ask yourself why you want to make the switch in the first place. Are you looking for more autonomy, the ability to choose what policies you want to sell, the opportunity to earn more money, or the freedom to market yourself as you wish? 

Understanding your motivations behind wanting to become an independent agent can help you decide if it’s a good fit for you or not. 

Are You an Entrepreneur? 

Not all insurance agents are good fits for the independent lifestyle. Why? Because not everyone is an entrepreneur. 

While many people would love to be their own boss, not everyone is fully equipped — personally and professionally — to be that. And that’s OK. 

To be a successful independent insurance agent, you must recognize that you will be the boss — of everything. 

You’ll be responsible for everything from marketing to HR to sales to customer relations. You’ll need to answer the phones, handle customer complaints, get the mail — maybe even take out the trash. 

When you make the switch from captive to independent, you’ll be giving up comfort in exchange for control. Some people thrive on that control, while others thrive in an environment where they have a lot of built-in support. 

This is perhaps one of the biggest things you need to consider before making the jump, as it can make or break your success. 

What’s Your Strategy? 

Independent agents won’t be told what to do by an insurance carrier. They need to make these decisions on their own. 

Before making the leap, it’s important to build your agency strategy, considering everything from technology, to personality and brand, to marketing and sales. 

Make sure you fully develop this strategy in your head first, and then flesh it out on paper into an official plan. It’s a good idea to have a formal business plan before you officially make the leap, as this will serve as the blueprint and roadmap to your success. 

Consider what type of insurances you want to sell, who you want to sell to, what personality your brand will have, how you will attract customers and so on. It helps to develop a mission and vision statement, as well as long-term plans such as whether you want to expand, add other employees to your agency and so on. 

The more prepared you can be before you actually make the leap, the more successful you are likely to be. 

Do You Have a ‘Rainy Day’ Fund? 

The economics of being an independent agent are completely different from that of a captive agent. While you’ll still earn a significant amount of your income from sales commissions, captive agents have a steady base salary to fall back on in case they have a bad week or down sales stretch. 

Independent agents don’t have that financial security blanket. If you have a bad day, bad week, bad month or prolonged down stretch, you’ll need to have money on hand to be able to withstand this — both for your business and your personal life. 

You’ll need to have a rainy day fund to continue operating your business — money that can pay for rent, utilities, subscriptions, technology and more. You’ll also need a rainy day fund for your personal life, too — money that can pay your bills, buy you food and more. 

It takes time to build a new business, so most new independent agents use their own personal savings to fund their life as they get it off the ground. In addition, you’ll need some startup capital to make all the initial purchases you need, including computers and technology, legal fees, licensing and more. 

Even established businesses can go through challenging periods, though, so you need to always keep enough money aside in case times get rough. 

Partner with Good Life

At GLIA, we provide independent agents with guidance, knowledge, tools, support and services that help them launch and sustain successful agencies. We also provide access to a full range of insurance products through more than 100 national carriers. For more information or to partner with us, visit us online or contact us today.