Starting An Independent Insurance Agency Made Easy

By Gloria B Cooper

This Book is about starting an independent property and casualty, life and health insurance agency from the beginning to the end.

• Language: English
• Publisher: Gloria B Cooper
• Release date: Jun 24, 2022
• ISBN: 9798215881262

Book preview

Starting An Independent Insurance Agency Made Easy:

––––––––

By

Gloria B. Cooper

Copyright© 2022. Gloria B. Cooper. All Rights Reserved.

No part of this work covered by the copyright herein may be reproduced or used in any form or by any means—graphic, electronic or mechanical without the prior written permission of the publisher. Any request for photocopying, recording, taping, or information storage and retrieval systems of any part of this book shall be directed in writing to the author.

This publication contains the opinions and ideas of its author(s) and is designed to provide useful advice in regard to the subject matter covered.

Contents

Dedication

Acknowledgments

Chapter 1: Understanding Insurance

What is Insurance, and How does it Work?

Insurance Endorsement

Insurance Liability

Credit-Based Insurance Score

Depreciation in Insurance Claims

Non-Compete & Non-Piracy Agreements

Insurance Indemnification

Chapter 2: Types of Insurances

Chapter 3: The Essentials

Self-Belief

Market Research

Data Collection Techniques

Business Roadmap

Start-Up Costs

Knowledge and Experience in the Industry

Work Ethic: Hard Work, Commitment, Persistence

Persistence

Hard Work

Commitment

Leadership

Self-Managing Skills

Communication Skills

Team-building Skills

Learning Agility

Managing Conflict Resolutions

Chapter 4: Agency Types

Types of Business Structures

Corporation

S Corporation

Limited Liability Company (LLC)

Partnership

General Partnerships

Limited Partnerships

Sole Proprietorships

Chapter 5: Registration

Registering the Agency

Selecting a State

Registering Corporation, LLC, or Limited Partnership

Registering Fictitious Business Name

Get Tax ID

Requirement of Obtaining an ID

Federal Tax IDs

State Tax IDs

Register Agency with Your State

Tax Permit

Income Taxes

Employment Taxes

Get Business Licenses and Permits

Business Operating Licenses

Doing Business as License

Planning Permits

Building Occupation Permits

Fire Department Permits

Tax Regulations

Health Licenses

Purchase Insurance

Assessment of Risks

Licensed Agent

Research More

Long-Term View

License through the Department of Insurance

Chapter 6: Staffing

Exempt vs. Non-Exempt Employees

At-Will Employment

Employee and Contractor

IRS/FICA/FUTA

Methods of Recruiting

Managing Employees

Employment Records

Chapter 7: Marketing

Unique Selling Proposition

Target Market

Message to the Customers

Media to Deliver the Message

Marketing Strategies for Insurance Agencies

Chapter 8: Financials

Dividing Profits

Operating Expenses

Chapter 9: Partnership

Creating and Leveraging Joint Ventures and Partnerships

Importance of Joint Venture

Factors Affecting Partnerships

A Successful Joint Venture

Conclusion

About the Author

Dedication

To my precious husband, Jesse J Cooper, and our children Jessica Slaton, Ashley Rogers, Jeston J Cooper, and Winston Cooper

Acknowledgments

Please, read my thank yous. No work is ever the product or service of one person.  First, I thank God for giving me the courage and wisdom to accomplish my goals.  I am grateful that my husband, Jesse J Cooper, supported me during the time of writing this book. He listens to me every day about writing this book. I am thankful to my sons: Jeston J Cooper and Winston R. Cooper, for giving me insights and mentoring me all the way to the finish line. They kept me focused.

I thank my mentor Matt Harvey, who help me achieve my goals by encouraging and helping me to do my best. I thank Barbie Ward Graham for being my best friend and always giving me a word of encouragement.

I acknowledge my parents, Robert Lewis and Shirley Nelson Beasley, and brother, Daron Lewis Beasley, who believed in me when no one else did. Even though they have passed away, I can remember their inspiring words and the motivation they instilled in me.

Thanks, everyone. I love you.

Chapter 1: Understanding Insurance

Financial stability is a tool that allows us to live life without having to worry about financial assistance during times of crisis, natural disasters, or accidents that are possibly inevitable. By having financial stability, you will have extra finances at your disposal at all times, but the question to ask is:

How can we ensure financial stability during such times?

The answer is rather simple and quite convenient once we establish a sound understanding of the term insurance.

What is Insurance, and How does it Work?

If we course through the history of insurance, we come to know that in ancient times, the very first insurance instances were recorded during the period when Babylonian and Chinese traders used to conduct business. The practice of insurance came into existence when merchants decided to limit the loss of goods so that merchants may not suffer losses.

It was around 600 B.C. that the Greeks and Romans decided to add different variations to insurance. They were the first ones to form insurance pertaining to life and health. Since their society was shaped by benevolence, insurance provided care for the families of the deceased. In modern times, it plays a significant role when it comes to financial stability, recovery, and establishment.

The word insurance means protection against financial predicaments or losses. It is utilized to hedge against the peril of uncertain and contingent losses. It is a contract, and it is defined through a policy wherein individuals or entities receive financial protection against losses from their insurers or insurance firms. The insurance company decides to take the risk, and it ensures affordability for individuals and entities that are insured.

However, there are multiple insurances available for individuals and entities, but the most common surfacing issue is which one to pick and why? Truth be told, there are no complexities involved once you are familiar with the standard procedure. If you are an individual or a business, you will be able to find an insurance firm that is willing to insure you or your business, but it all comes with a price.

Individuals and businesses usually resort to policies that insure health, property, and life. It has been recorded that every individual within the United States has at least one of the aforesaid insurance policies to their name. However, when it comes to insurance related to autos, the state has a law that needs to be abided by in order to avail of the insurance.

When we talk about businesses, there are distinctive policies that insure against different types of risks. Every entrepreneur knows that operating a business inevitably demands managing risks. There is no denying that a business will inevitably face financial loss, one way or the other. For instance, if you have a restaurant, you will require a policy that covers damage that mainly results from cooking. So, if your kitchen got caught in an accident involving a deep-fryer, your insurance company would provide finance for the damages. If you are an auto-dealer, your insurance will cover damages that have occurred during test drives or any other ways that involve an automobile. Simply put, if your vehicle is damaged in any way, the insurance company is either going to pay for the repairs, or if it is totaled, it will replace the automobile.

There are three essential components involved in any kind of insurance, and they are 1) Premium, 2) Policy limit, and 3) Deductible.

1: Premium

A premium is a price that the insured pays to avail of insurance coverage. It is usually expressed as a monthly fee and is quite similar to how one pays a monthly fee for a specific service. It is determined by the insurer or insurance company based on their clients’ risk profile, and this may involve creditworthiness.

Creditworthiness refers to the extent to which a business is considered worthy or suitable to receive financial credit, and it is based on the reliability of the business and its history of paying it back in the past. For instance, if you are the owner of several automobiles and you have a long history that involves road accidents and reckless driving, you are likely to pay more than the person who has been maintaining a decent driving record. However, this is not always the case because there are insurers out there that charge the same for the same policies.

2: Policy Limit

The policy limit is the coverage limit that how much the insurer will pay to cover the loss. You can set maximums that may be set according to the per-period ratio.

Usually, insurances with higher limits come with higher premiums, i.e., the higher the premium, the more financial coverage the insured will receive from the insurer.

3: Deductible

A deductible is a specific amount that the insured needs to pay before the insurer pays for the filed claim. Deductibles restrict small and inconsequential claims. They mainly rely on and are applicable as per policy or as per claim depending on the insurer and the policy type that the insured has as a business or as an individual.

Policies that have a high deductible rate are usually less expensive since the out-of-pocket expenditure, which is high, results in people claiming less. The reason people with higher out-of-pocket expenses tend to file fewer claims is that they do not want to pay a hefty sum of money or any money at all. They just want the insurers to bear the entire cost rather than spending money out of their own pocket.

These are just a few components of insurance. There are many more components involved that you need to understand before you take steps to start your own insurance agency.

Insurance Endorsement

An insurance endorsement, also known as an insurance rider, is an amendment that applies to an existing policy contract that amends the terms