You’ve created a successful Medicare business as an independent agent. Now, you’re considering taking the next step: launching an insurance agency. There are a few things you need to know to ensure your small business gets off on the right foot and flourishes in a competitive environment.
11 Essential Steps for Starting Your Own Agency
Once you’ve decided it’s the right time to start your own agency, there are important steps you need to take to set up your business properly:
1. Register your LLC or corporation in the state where you plan to do business.
2. Apply for the appropriate license with your state’s Department of Insurance.
3. Choose the principal of your agency. This individual must be licensed in the state where you wish to do business.
4. Find an accountant. It’s time to move beyond a simple Excel spreadsheet. Properly maintaining your books and understanding your balance sheet will be essential to your growth. Find an accountant who has worked with insurance agencies and understands the typical cash flow and commission structures. You can probably outsource accounting at this point, rather than hiring a full-time employee. Your accountant will probably recommend an accounting system to keep track of income and expenses. This person will also help you prepare your business tax returns each year.
5. Determine your staffing structure. Will you need to hire employees, or can you manage with a 1099 subcontractor model – at least initially? Ask your accountant about the pros and cons of these options. If you’re hiring employees, you may also need to obtain workers’ compensation insurance, an employee benefit plan, and a payroll provider. Hiring employees raises the complexity of your operation, so make sure you’re ready.
6. Establish your place of business. Will you continue to work from your home office and your customers’ homes, or will you need a brick-and-mortar location where your Medicare agents can work, and you can facilitate meetings and training? Having a business location separate from your home will significantly raise your overhead costs and require you to get property insurance, electricity services, and Internet services, leading to higher expenses. Discuss the pros and cons with your accountant. You may discover that an on-demand workspace option may be a cost-effective way to accommodate occasional office and meeting space needs.
7. Purchase errors and omissions (E&O) insurance to protect your agency against lawsuits. In addition to E&O insurance, consult with your FMO or business insurance consultant about other recommended coverages, such as cyber insurance, worker’s compensation insurance, or property insurance. Your specific needs will vary significantly based on your business model.
8. Set up your agency’s contact details. You will need a business mailing address, as well as an agency email address and a main agency phone number. Avoid using your personal contact information for your agency.
9. Develop a business & marketing plan. Define your target market and plan marketing strategies to attract your market. Be sure to leverage professional referral partnerships with doctors, pharmacies, property and casualty insurance agencies, and financial advisors.
Marketing ensures that potential customers can find you and keeps leads flowing through your sales pipeline. However, your Medicare agency must ensure that all marketing complies with CMS guidelines. Be sure your agency is ready to compete by compliantly using the following marketing tools:
- An online presence with a website and social media (such as Facebook and LinkedIn) where you share relevant content and engage your audience.
- Email campaigns, such as regular newsletter.
- Direct mail campaigns for specific audiences.
- In-person events for building connections in your community and creating name recognition as a trusted and knowledgeable resource. Options include hosting educational events, attending networking events, and joining organizations in your community.
10. Recruit qualified Medicare agents. To grow your Medicare agency, you will need to recruit agents to work for you. Before recruiting other agents, establish your compensation package and employment structure, and prepare any needed contracts. When you start recruiting, you don’t want to appear disorganized or unsure of yourself.
When you start recruiting, consider both agents who are already trained and licensed as well as individuals who are new to the business. You may need to try several recruiting strategies, such as looking on job boards like Indeed and LinkedIn, posting on social media, and attending networking events.
11. Establish processes and resources that support your team’s success.
Once you’ve recruited agents for your team, you’ll need to do everything possible to ensure their success. A good agent support system should include:
- Product portfolio – To fuel the success of your sales team, and to satisfy the needs of a growing and diverse group of customers, you will need a broad portfolio of carriers ensures you can meet the diverse needs of your clients. This should include several Medicare plans in your area, as well as ancillary products that provide cross-selling opportunities, such as hospital indemnity, dental, and life insurance and annuities.
- Training and certifications – It’s imperative that you train and educate your agents. Ensure all agents follow CMS compliance rules, complete AHIP, and earn any necessary CE credits. If you work with an FMO, they will support you and provide training resources to manage training and certifications.
- Technology – Provide agents with tools to work efficiently, such as:
- A CRM tool to manage all aspects of your business – for tracking customer data and interactions, automating workflows, managing email campaigns, and monitoring the progress of leads from first contact to close. A good CRM will enable real-time usage of analytics that are key to making smart business decisions.
- Online enrollment platforms to simplify the application process and reduce errors.
- Online meeting and call recording platforms to increase convenience and ensure compliance.
- AI-powered solutions (such as AI screeners and agents) that can handle routine repetitive tasks, freeing agents up to focus on more complicated customer needs.
How an FMO Can Help
Scaling your small business into a larger operation requires significant time and resources. Fortunately, there’s an easier way than doing everything yourself. Consider contracting your agency with an FMO like Western Asset Protection.
Western Asset Protection provides a wide range of services to support your agency and its agents, including access to top-tier carriers, world-class training, marketing support, and industry-leading tools and technology. Our dedicated team is committed to helping you grow your business, successfully transitioning from Medicare agent to Medicare agency.
Contact us today!