I am more of a lurker on this site, and have only made a couple posts. I am about 3 months away from opening the doors to my own agency, and wanted to give some of my projections and see what you guys think.
about:
I will be partnering with a long time friend also in the insurance industry, we have collectively 15 years of insurance experience. I was recently let go from AAA for being "to progressive" and a "maverick" I was the number 1 producer in my district for the 12 months I was with them, and 2nd place wasn't even close. My average month had me writing between 60-80 policies a month at approx 50k in new premium every month. The firing was very political and stupid on their part (another time, another thread) We will be selling P&C, Life, and eventually commercial. We will be a fee based brokerage and will charge a broker fee. The location we are in talks for is in a very VERY desirable location. They are asking for $2 per sqft at 1200 sqft. (Welcome to the Bay Area) Keep in mind, we will negotiate that and hopefully do a progressive lease.
I made my living the typical way "smiling and dialing" and building a network of various referral sources. Those same sources I will attempt to draw on when going live. I do have a small reserve for savings that I could live off of for the next 6 months if need be, and we are currently in talks with a couple of investors that we know personally. It would be a partnership, and we split profit 50/50. We are thinking of filing an S-corp, and will have written agreements in place. Enough about me, here is what I have projected:
First Year Start up Cost: $62,250
(Building for the first year, E&O, GL, computers, software, etc. Comparative rater, health insurance, small office renovation, utilities, furniture, phone and internet systems...etc, etc, etc)
* I figure between the two of us, we can write $42,250 in net written premium a month.
* Average premium per policy where we live is $650
* That breaks down to 65 policies a month AS AN OFFICE. At an average of 25 open office days a month, that equals out to 2.6 policies a day.
* Average broker fee for policies written in my part of the state and area is $150
* $42,250 premium at 15% commission is $6337 a month or $76,044 annually.
* 65 apps a month at $150 per for broker fee is $9750 or $117,000 annually
* $117,000 plus $76,044 is $193,044 in revenue. Minus first year expenses of $62,250 and it is $130,794 or $65,397 each GROSS.
To some, these projections may appear to be a pipe dream, I feel they may be somewhat conservative from my experience. Where I live, we will tap into the SanFran Bay Area market, the Sacramento market, and the Napa valley market. All very expensive places to live and insure. If I am off by 20% either way, I still think that it is a great start. We have 1 viable competitor in town, and 2 viable competitors in the next town.
For marketing, we plan to utilize the location as much as possible, consistent cold calls to existing contacts, tapping into our referral network, heavy utilization of social media, community event involvement, lot's of walking and talking.
My concerns are finding the small to large area's that I am either neglecting, overlooking, or ignorant to. We are doing as much research into the tax situation, filling, group affiliation, etc.
about:
I will be partnering with a long time friend also in the insurance industry, we have collectively 15 years of insurance experience. I was recently let go from AAA for being "to progressive" and a "maverick" I was the number 1 producer in my district for the 12 months I was with them, and 2nd place wasn't even close. My average month had me writing between 60-80 policies a month at approx 50k in new premium every month. The firing was very political and stupid on their part (another time, another thread) We will be selling P&C, Life, and eventually commercial. We will be a fee based brokerage and will charge a broker fee. The location we are in talks for is in a very VERY desirable location. They are asking for $2 per sqft at 1200 sqft. (Welcome to the Bay Area) Keep in mind, we will negotiate that and hopefully do a progressive lease.
I made my living the typical way "smiling and dialing" and building a network of various referral sources. Those same sources I will attempt to draw on when going live. I do have a small reserve for savings that I could live off of for the next 6 months if need be, and we are currently in talks with a couple of investors that we know personally. It would be a partnership, and we split profit 50/50. We are thinking of filing an S-corp, and will have written agreements in place. Enough about me, here is what I have projected:
First Year Start up Cost: $62,250
(Building for the first year, E&O, GL, computers, software, etc. Comparative rater, health insurance, small office renovation, utilities, furniture, phone and internet systems...etc, etc, etc)
* I figure between the two of us, we can write $42,250 in net written premium a month.
* Average premium per policy where we live is $650
* That breaks down to 65 policies a month AS AN OFFICE. At an average of 25 open office days a month, that equals out to 2.6 policies a day.
* Average broker fee for policies written in my part of the state and area is $150
* $42,250 premium at 15% commission is $6337 a month or $76,044 annually.
* 65 apps a month at $150 per for broker fee is $9750 or $117,000 annually
* $117,000 plus $76,044 is $193,044 in revenue. Minus first year expenses of $62,250 and it is $130,794 or $65,397 each GROSS.
To some, these projections may appear to be a pipe dream, I feel they may be somewhat conservative from my experience. Where I live, we will tap into the SanFran Bay Area market, the Sacramento market, and the Napa valley market. All very expensive places to live and insure. If I am off by 20% either way, I still think that it is a great start. We have 1 viable competitor in town, and 2 viable competitors in the next town.
For marketing, we plan to utilize the location as much as possible, consistent cold calls to existing contacts, tapping into our referral network, heavy utilization of social media, community event involvement, lot's of walking and talking.
My concerns are finding the small to large area's that I am either neglecting, overlooking, or ignorant to. We are doing as much research into the tax situation, filling, group affiliation, etc.
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