How Hard Are Direct Appointments to Get?

[indienoise]

So I'm definitely going to be going from captive to independent. Probably happening within a year. I'm working as an independent contractor out of my own space for a captive agent, so I don't have experience OWNING the agency, but I'm going to learn all that I can, and I'm going to make it work. It's not currently my primary source of income, so if things are slow for a little while it won't flush me out of the business.

You might have seen in the acquisitions subforum I'm pursuing an existing agency to purchase. If that doesn't work out, I'll be starting from scratch...sort of.

Without all the gory details, let me just say the circumstances are such that I'm confident I'll be doing an agent of record change for the majority of my current clients, and keeping them with the same carriers as much as possible. I'm not concerned about my non-compete, no matter if that ends amicably or not, it will go in my favor. I won't be doing anything that would warrant any judgement against me. If I start scratch, I'll actually be starting with roughly 200k in annual written premium, once the agent of record change has been done. I understand I may not be moving some or all of my preferred and/or EFT customers, and some of my cash customers may still not switch (but would have to start driving 25 miles away to make payments if they choose not to) and have accounted for that. Between 12-24 months out, I should be over 500k in annual written premium. I currently am at ALMOST 2 years experience. Let's just say when I make my move I should have at least 2 1/2 years in.

My question is, how difficult are appointments to actually get? I know some of the smaller nonstandard carriers and some others like Progressive or Foremost, it won't be difficult - but bigger names like National General, Titan/Victoria, Dairyland - would I expect any problem in getting appointments? 80% of my business now is with Titan and Victoria, getting that appointment will be crucial to my success. I wonder if having a history with them will help with getting a new appointment as indy vs captive? I'll also be looking into some midmarket carriers, i.e. Auto Owners, Allied, etc. Are these difficult to get appointments with? Or would I only have trouble with preferred carriers like Hartford, Travelers, etc?

Homeowners is a bit troubling to me because it's not much of my business, but I do have clients with needs to fill there from time to time, and there is really no one class that most of them fit into. Some need standard homeowners, some are high risk, some are probably preferred, some are mobile homeowners, some tenants, etc. I know I can probably swing Foremost, again, but I haven't actually had much luck with them to date. I know of a couple of MGA's I can look into for property, maybe that's the best bet in my case, but I'm just curious what's the likelihood of getting and keeping appointments with more property-focused carriers? ASI, Aegis, American Modern, Universal P&C, that sort of thing. I realize if I can get Allied and Owners I'll have options there also, but that would only fill a part of what I need, and I'm not sure if I can get those appointments right away or not...

I know there are no definitive answers to be had here, I'm just trying to get an idea of just how feasible this will be for me.

Thanks.

 

[Arnage150]

So I'm definitely going to be going from captive to independent. Probably happening within a year. I'm working as an independent contractor out of my own space for a captive agent, so I don't have experience OWNING the agency, but I'm going to learn all that I can, and I'm going to make it work. It's not currently my primary source of income, so if things are slow for a little while it won't flush me out of the business.

You might have seen in the acquisitions subforum I'm pursuing an existing agency to purchase. If that doesn't work out, I'll be starting from scratch...sort of.

Without all the gory details, let me just say the circumstances are such that I'm confident I'll be doing an agent of record change for the majority of my current clients, and keeping them with the same carriers as much as possible. I'm not concerned about my non-compete, no matter if that ends amicably or not, it will go in my favor. I won't be doing anything that would warrant any judgement against me. If I start scratch, I'll actually be starting with roughly 200k in annual written premium, once the agent of record change has been done. I understand I may not be moving some or all of my preferred and/or EFT customers, and some of my cash customers may still not switch (but would have to start driving 25 miles away to make payments if they choose not to) and have accounted for that. Between 12-24 months out, I should be over 500k in annual written premium. I currently am at ALMOST 2 years experience. Let's just say when I make my move I should have at least 2 1/2 years in.

My question is, how difficult are appointments to actually get? I know some of the smaller nonstandard carriers and some others like Progressive or Foremost, it won't be difficult - but bigger names like National General, Titan/Victoria, Dairyland - would I expect any problem in getting appointments? 80% of my business now is with Titan and Victoria, getting that appointment will be crucial to my success. I wonder if having a history with them will help with getting a new appointment as indy vs captive? I'll also be looking into some midmarket carriers, i.e. Auto Owners, Allied, etc. Are these difficult to get appointments with? Or would I only have trouble with preferred carriers like Hartford, Travelers, etc?

Homeowners is a bit troubling to me because it's not much of my business, but I do have clients with needs to fill there from time to time, and there is really no one class that most of them fit into. Some need standard homeowners, some are high risk, some are probably preferred, some are mobile homeowners, some tenants, etc. I know I can probably swing Foremost, again, but I haven't actually had much luck with them to date. I know of a couple of MGA's I can look into for property, maybe that's the best bet in my case, but I'm just curious what's the likelihood of getting and keeping appointments with more property-focused carriers? ASI, Aegis, American Modern, Universal P&C, that sort of thing. I realize if I can get Allied and Owners I'll have options there also, but that would only fill a part of what I need, and I'm not sure if I can get those appointments right away or not...

I know there are no definitive answers to be had here, I'm just trying to get an idea of just how feasible this will be for me.

Thanks.

The short answer is very hard. You have no profitability/volume history to show them.
I have been in business for 60 years and still have a tough time getting appointments. The first thing they ask for is your profitability/volume records from other carriers you have. You don't have that to show them.

You may also want to think about titan. If you have 80% of your business there it is key to get them. You have to look at it from the companies perspective. If they appoint you they gain nothing and jeopardize a relationship with the current agency. Why would they do it? Unless your boss okays it but I don't see that happening with out some money changing hands.

 

[indienoise]

The short answer is very hard. You have no profitability/volume history to show them.
I have been in business for 60 years and still have a tough time getting appointments. The first thing they ask for is your profitability/volume records from other carriers you have. You don't have that to show them.

You may also want to think about titan. If you have 80% of your business there it is key to get them. You have to look at it from the companies perspective. If they appoint you they gain nothing and jeopardize a relationship with the current agency. Why would they do it? Unless your boss okays it but I don't see that happening with out some money changing hands.

As far as that's concerned, I fully expect to be paying something to the current agency principal.

That said, knowing that I'm mostly targeting nonstandard, and aside from Progressive and Titan, would mainly be selling smaller, regional carriers who I ought to at least get a couple of appointments with, would it still probably be best to wait until I can either acquire an agency or a book of business before going on my own?

 

[Arnage150]

As far as that's concerned, I fully expect to be paying something to the current agency principal.

That said, knowing that I'm mostly targeting nonstandard, and aside from Progressive and Titan, would mainly be selling smaller, regional carriers who I ought to at least get a couple of appointments with, would it still probably be best to wait until I can either acquire an agency or a book of business before going on my own?

Definitely. And make sure whatever agency you are looking to get is profitable. Don't buy a sinking ship.

 

[djs]

One thing you'll find out quickly is agent of record changes are not as easy as you think. You run into a lot of issues......

- Several carriers require you to re-underwrite the risk. This can lead to policy cancellations.
- Several carriers don't accept them. You must cancel the existing policy and rewrite them. This can lead to rate changes.
- Clients are usually not as willing to sign them as the agent thinks. They usually see it as leaving a known thing for an unknown thing.
- Some carriers will accept the AOR but still send the commission to the original writing agent.

If you are planning on starting an agency by raiding another agents book of business, its not a viable business plan. If the current agent has a good rep with the carrier and there is more than a normal transactional amount of AOR's going on, the agent will have the carrier put a stop to them and reverse the ones that happened. Basically almost all carriers frown on new agents raiding existing agents books.

You need to think about buying them from your agent, not stealing them. Yes, its business you wrote, but its business he paid you to write.

Dan

 

[indienoise]

One thing you'll find out quickly is agent of record changes are not as easy as you think. You run into a lot of issues......

- Several carriers require you to re-underwrite the risk. This can lead to policy cancellations.
- Several carriers don't accept them. You must cancel the existing policy and rewrite them. This can lead to rate changes.
- Clients are usually not as willing to sign them as the agent thinks. They usually see it as leaving a known thing for an unknown thing.
- Some carriers will accept the AOR but still send the commission to the original writing agent.

If you are planning on starting an agency by raiding another agents book of business, its not a viable business plan. If the current agent has a good rep with the carrier and there is more than a normal transactional amount of AOR's going on, the agent will have the carrier put a stop to them and reverse the ones that happened. Basically almost all carriers frown on new agents raiding existing agents books.

You need to think about buying them from your agent, not stealing them. Yes, its business you wrote, but its business he paid you to write.

Dan

I'll take your points into consideration. If changing AOR requires a rewrite, it would definitely impact the premium given the UW guidelines, and they would end up simply switching carriers instead..

Let me make clear, though, that my plan is not to simply "raid" the other agent's book. It is my full intention to approach him long before I make any changes to try to make arrangements to allow them with good will, which would include him receiving income from the clients for a time into the future. I am not the sort of person who wants to take advantage of someone, and since he gave me the opportunity to get started, I want to be fair to him.

The reality of the situation, which I realize may be a little unique, is if there is not an AOR change that takes place, the business will be lost to both of us. The amount of business from this satellite office is not enough to be worth his while to establish his own office here (I provided everything tangible - office space, equipment, and my own leads/referral sources, the only reason I accepted these arrangements was my lack of experience at the time - I hadn't planned on leaving when I started, but things do change). He would be leasing a new office, purchasing new furniture/equipment, and hiring a new employee (who would have to be bilingual, by the way) for about $40k/year in gross revenue (not profit) IF all the customers stayed with him (none of them have any idea who he is), all about 25 miles from his own office. Meanwhile, the referral sources would follow me, not him, due to my built relationships. And since 90% of this business came from my referral sources, the ones that didn't stick would eventually end up back in my office anyway. Which is why I say I would not be violating any non-compete clause that's enforceable in this state. I would not be marketing them directly. Only being given the opportunity to send them mailers or call them would simply speed up the process, which is why I'm more than happy offering a commission split to the current principal as a concession. What would you do if you were him?

Really, my biggest unknown is whether I can still get appointed with the same carrier through their independent channel. Because, as I mentioned, I want to keep ALL of my current customers with them if possible, and still continue to place business with them, which I plan on pointing out to them, and if I can't, I will probably lose about half of the customers I intended to keep. Unfortunately, in that case, most of that business will also be lost to both the principle agent AND the carrier - they will not be driving 25 miles for cash payments each month, and as I mentioned, rewrites will not be favorable for them - they would end up switching carriers anyway.

 

[Agent12345]

You said you would likely lose some of your cash customers. Just curious what percent of your non standard customers pay with cash?

I have nothing to add to the discussion just saw that statement and was generally curious.

Good luck

 

[indienoise]

You said you would likely lose some of your cash customers. Just curious what percent of your non standard customers pay with cash?

I have nothing to add to the discussion just saw that statement and was generally curious.

Good luck

I don't know the exact number, but probably half. I'd say another 15-25% pay with credit or debit, but come in to the office to do so, because they are also here on other business. The rest pay over the phone or are on EFT.

 

[Francesnunez]

I would say, don't let people demotivate you. I started my own agency 5 months ago with only 1 year of experience. I thought at first that the appointments were going to be the hardest part, and it was actually the easiest. It's all about asking, reading, calling. That's it. Only like 3 carriers that I called wouldn't appoint me because I had to be in business for 3 or more years. MGA's are super helpul too. Some of them will actually help you get direct appointments.

 

[AverageJoe]

I would say, don't let people demotivate you. I started my own agency 5 months ago with only 1 year of experience. I thought at first that the appointments were going to be the hardest part, and it was actually the easiest. It's all about asking, reading, calling. That's it. Only like 3 carriers that I called wouldn't appoint me because I had to be in business for 3 or more years. MGA's are super helpul too. Some of them will actually help you get direct appointments.

What state are you in?