They say that failure isn’t fatal. But it can still hurt! When you open your own independent insurance agency, we want to help you steer clear of failure so that you can avoid pain and achieve success. Read on to discover common reasons independent agents fail and how to avoid the sting of these traps.
Reason #1: They have a poor marketing plan
Some agents mistakenly believe that having more carriers will mean getting more prospects. But they’re not taking into account the fact that independent carriers don’t market for agents. If you don’t have a solid marketing plan, you won’t get many prospects at all.
So how do you market effectively? It begins by spending money in the right places. Different marketing strategies work for different people. You need to focus your resources on the strategies that are effective for you, whether it’s an agency website, direct mail, local sponsorships, networking organizations, or paying someone to get leads for you.
Some new independent agents make the mistake of marketing to clients they cannot help. This is most prevalent in commercial insurance because they are too eager to write policies, even if the client presents a difficult scenario. Don’t waste your time this way! Market to those you can write the proper policies for.
Also, new independent agents are prone to misjudging how many people they can get in front of. As a result, if they’re wrong about how quickly they can grow their income, they might feel like this guy: (except with money instead of a baseball).
Reason #2: They struggle to choose the right carriers for their prospects
Some independent agents don’t have—or don’t choose—the right carriers to fit their prospects.
An independent agent may not be appointed with enough carriers to be able to offer their prospects competitive rates. (As an independent agent with Firefly, an agent can get direct appointments with many more carriers than they could on their own. So if you work with us, we go a long way to fixing this problem for you.)
Even with more carriers, some agents might say, “I need carriers who will write for homes that are vacant, in poor shape, or that lack standing repairs.” But that’s just not what we or most carriers do! Same with non-standard auto—Firefly doesn’t excel with this type of policy. If agents sign up with us expecting to write those kinds of policies, they are going to be disappointed.
Carrier selection is especially important in commercial insurance. Commercial appetites vary greatly between carriers so you need to know what types of risks you plan to write. That way you don’t solve problem #1 (not enough prospects) but can’t finish the job for those prospects (problem #2), like the poor guy below.
Reason #3: They don’t offer value to prospects
If you want to avoid failure as an independent agent, your prospects need to see value in what you offer to them. You will struggle if you don’t have competitive pricing. Luckily, Firefly’s array of carriers can help you get the competitive pricing you’re looking for. (That is, unless you focus on prospects Firefly doesn’t have markets for—see the previous point.)
In addition to pricing, customers are often looking for someone who can help them understand what they are buying, and what type of coverage they should choose. They’ll want to know that you can help if a claim does not seem to be settled right. They also want to know that you will be there for them over time, and not write them and forget about them for three to five years.
These days, it’s also crucial that an independent agent has the ability to use technology effectively. An agent who is not easy to work with in our tech age will experience a lot of difficulties (customer self-service for example).
Reason #4: They lack practical knowledge
Without practical knowledge about essential parts of the insurance business, an agent will flounder. Independent agents need to understand how coverage works and how to help a customer determine how much coverage they need. They must also keep track of coverage options. If all an agent can do is take someone’s declaration pages and say, “I can match that,” they’re going to make painful mistakes.
This is one of the reasons we rarely work with agents who are brand new to property casualty insurance.
Reason #5: They spend money in the wrong places
As mentioned in the first point, successful agents spend money in the right places. Independent agents who spend too much on fees or splurge on expensive office space are squandering funds that they could be using to market more effectively. They may later wish that they had more money to put toward marketing to prospects. Smart independent agents invest in good marketing strategies and spend their money where it is needed most.
Every agent makes mistakes. But if you know what traps to look out for, you’ll make fewer mistakes and avoid a lot of pain. We have confidence in you and your ability to achieve success! And now that you are aware of these common pitfalls, you can move forward with more confidence in yourself as well.