As an independent insurance agent, there are several things I wish I had known before I got started selling insurance. Agents new to the industry are full of hope and trust. The problem is… not everyone is looking out for your best interest, so I want to share some things that, as a new agent, you should know.
I got my property and casualty insurance license in 2008, and I have never used them. In 2010, a friend suggested I get my life license. I was so trusting, I simply said okay.
Thirty-plus days later, I was a licensed life agent too. Now, the question became “what do I do with the license?” You have two choices: become an independent insurance agent or a captive agent. Independent agents find an independent marketing organization (IMO), a company that offers insurance products and services to insurance agents or agencies, or they go to work for a brick-and-mortar business like Allstate, State Farm, etc. as a captive agent. A captive agent can only typically represent one company.
I chose the independent agent route. My first mistake was not understanding insurance contracts. The first thing I wish I had known was more about how the insurance contracts worked. To briefly break it down, The IMOs get a broker contract with the carriers, so they can offer contracts to you as an agent. The IMOs contract may be anywhere from 150 to 160 percent. They offer you a percentage based on the production you have written. I didn’t know this, so when I took a contract at 55 percent with no renewals, I thought that was “right”.
WRONG…
Beware of companies that are offering really low contract rates. I wish someone had warned me. Term products typically pay a lower commission rate than whole-life policies. I sell both because I believe each has its time and purpose. Understand the products you are selling, despite what you may be “coached” to believe. Remember, these are real people you are working to cover. You need to decide the product best suited for the client’s needs.
Typically, when you leave an IMO, they will provide you with a written release, so the insurance carriers that you are contracted with will release your affiliation with the particular IMO. Releases are not always easy to get from “shady” IMOs. Without a release, a carrier may require you to wait 6 to 12 months before you can get a new contract.
When I left my first IMO, my contracts were tied up with this IMO. No releases were provided. I partnered with a new IMO, but the contracting process can take time. Without products to provide, your hands are tied with selling insurance and producing income. This is not a good place to be as an agent.
Make sure the IMO that you choose to partner with shows integrity, authenticity, and character.
CLOSING the Sale
Be wary of any mentor, agent, or up line that continually tells you SHOULD close every appointment. After spending thousands of dollars in sales training, not everyone should be sold.
If you are truly selling insurance ethically, which is needs-based selling, you will encounter clients that have no need for your product or do not have the financial ability to afford your products. You are doing your business and your client a disservice by pushing for a sale.
Leave the mentality at the door that everyone should be sold. That is not the case. As an agent, if you have the proper portfolio of products, your client may have a need that you can solve with another product. Do your due diligence in discovery to identify what the true needs of your client are and fulfill them properly. This will set you up for long-term clients and referrals.
If your business is based on hard close selling people without needs or financial resources, you will see a decline in your placement rate and an increase in your chargeback rate. Neither is what you want in your business as an agent.
APPLICATIONS
As agents, we have moved more to electronic applications, which makes approval faster and more efficient. As an agent, let me warn you, be sure to take great notes about your potential client. Keep detailed notes, correspondence, and emails regarding the customers organized and easily accessible.
Nobody told me that every contract that I signed included an indemnification agreement. You agree to indemnify the insurance carrier for any policy that you have written. What does that mean? Indemnification, also referred to as indemnity, is an undertaking by one party (the indemnifying party) to compensate the other party (the indemnified party) for certain costs and expenses, stemming from third-party claims. In everyday terms, you will compensate the Insurance carrier for certain costs and expenses that they may incur from a client.
PROFITABILITY
Profitability is a very important concept you need to learn early in your business if you want to stay in business. Leaderboards DO NOT pay the bills. Don’t get blinded by the flashy sales numbers. Profitability is most important. It’s not how much you sell, but how much you net after all costs.
Focus more on your profitability, including improving your close ratio, getting referrals, organic lead generation, and increasing the lifetime value of your clients.
All four are lessons I learned along the way, and I hope to educate those working independently or lacking guidance in the industry.
Being an insurance agent is a very honorable job when done correctly. Leave behind the hard close sales strategy, shady practices, and overselling and bring needs-based selling to the table. I will leave you with this question when you leave the appointment: did you treat your clients the way you would want your parents or grandparents treated? If the answer is yes, continue on.
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