Starting Over: The journey from captive to an independent agency

August 29, 2018 /

Written By: Mike Alwais, Agency Product Marketing Director

With Nationwide shifting its distribution entirely to independent agencies over the next couple of years, captive agencies need to be thinking about the journey you'll be embarking on. There is plenty of advice for becoming an independent agent, but most of it is aimed at first-time agents. Changing from a captive to an independent agency has some wrinkles. In this blog, we will look at five issues that an agency should consider when making the transition.

In many ways, the newly independent agent is starting over. One day, you are servicing an established customer base. The next, you're starting from a clean slate.  


1. How will you attract customers?

A big part of this decision is whether you buy a book of business your existing one or someone else’s. If not, be thinking about the length of your non-compete agreement. How long must you wait until you can approach your old customers for your new agency?

Even if you buy a book of business - and especially if not - the new independent agent needs to make a concerted effort on customer marketing. Like most small businesses, you’ll want to think about a website since customers increasingly look for some amount of online engagement. Social media is another area that may be unfamiliar but can be an important method for finding customers. Not all marketing is digital. The independent agency can elevate its visibility by being active in the local community. Lastly, think about your direct network. Are there people in your circle that can bring you into contact with prospects? As a technology provider, we should mention that your systems should support your marketing efforts. 


2. How will you support your business financially?

The second area to consider (possibly your first consideration), is financial. In converting to independent, you are really starting a small business. You’ll need to have financial resources for 3 years in order to give yourself time to get established and grow enough to be self-sufficient. Making investments in customer marketing is hard to do if you are running on fumes. Some advisors suggest a written business plan. That’s a matter of personal preference but having a financial projection that includes your funding sources, and some cash flow projections for marketing and business operations is prudent. 


3. What resources will you need?

There is a wide range of resources available to the newly independent agent. First, associations like SIAA can be a tremendous resource for networking and education. Then, groups with common situations and backgrounds can be helpful for comparing notes. For example, ex-Nationwide agents will benefit from networking with each other. In addition to general advice from networks, some more specific help can be useful. Educational resources can be vital depending on the lines of business you want to offer. We suggest that an agency should have access to an insurance knowledge base. Insurance Producer information allows an agent to quickly learn the essentials of new insurance types and provide your customers with solid advice. Developing the skills to sell these new areas will let an agent grow their book and diversify away from the most commoditized personal lines.

While a first-time agent may opt to postpone investing in insurance software solutions, a captive agent will be accustomed to using an agency management system. We have a lot of resources to help you choose the right insurance agency management system. A few things you should consider are tools like sales cycle management and customer marketing automation to help drive rapid growth, and a system that will make you efficient in servicing customers, so you can focus on finding customers. 


4. What kind of agency do you want to build?

Many captive agents have focused on personal lines. Now what? Will you add BOP, benefits, complex or niche commercial? Direct writers are a threat, those carriers you see running TV commercials. There also are numerous insurance technology startups that are trying to transform the insurance buying landscape. When starting out, there is a natural tendency to stick close to what you know. Looking forward, there are numerous opportunities in complex and niche commercial lines to think about. It’s an exciting time to come into the independent channel, filled with many new opportunities but also with some threats.

We suggest this checklist for agencies making the change from captive to independent to think about the kind of agency they want to build and their technology needs as a good starting place. 

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