Starting an insurance agency is a significant but rewarding venture for professionals seeking independence, income potential, and long-term value. Whether you’re transitioning from a corporate insurance role or entering the industry for the first time, understanding how to start an insurance agency requires a clear roadmap.
This guide outlines the most important decisions and investments required to build a successful agency—covering everything from licensing and tech to marketing, staffing, and carrier access. It includes practical tips and data-driven benchmarks to help you start and scale with confidence.
Why Start an Insurance Agency?
According to S&P Global, U.S. P&C insurers surpassed $1.3 trillion in annual direct premiums written. The insurance industry has demonstrated stability even during economic downturns.
Insurance agency ownership offers:
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Control over your work-life balance and earnings
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Recurring revenue from client renewals
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Scalable operations and multiple expansion paths
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An asset that may appreciate over time and, depending on the business model, can potentially be sold or passed on
Agencies that offer a diverse range of insurance products consistently achieve stronger long-term growth. Industry data shows that agencies with multi-line clients increase retention rates materially, typically between 5 and 8 percentage points, resulting in higher revenue per client through cross-selling opportunities. While selling multiple product lines requires broader expertise, additional licensing, and different sales processes, the long-term benefits of improved retention and increased revenue make a multi-line approach a proven strategy for sustainable growth.
Step 1: Choose Your Business Model
Your business model defines your carrier relationships, operational flexibility, and cost structure.
| Model | Description | Startup Cost Range |
|---|---|---|
| Independent | Self-owned agency, access to multiple carriers via direct or network contracts | $20,000–$175,000 |
| Captive | Exclusive partnership with one insurance company | $50,000–$100,000+ |
| Franchise | Includes branding, tech (some), servicing (some), and onboarding for a fee | $25,000–$120,000+ |
| Aggregator/Cluster | Join a network for market access and shared services | Varies: Startup, Monthly, Maintenance and even Exit fees may apply |
(Sources: SIAA, Franchise Gator, Insurance Business Magazine)
Each model has trade-offs in autonomy, support, and time to profitability. Captive agencies offer structured support but limited carrier options, while independent agencies offer more flexibility and higher long-term margins. Some franchise models offer franchise-fee forgiveness based on delivering specific growth metrics.
Step 2: Complete Licensing Requirements
Licensing is mandatory in all 50 states. Requirements typically include:
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Pre-licensing education and state exam
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Background check and fingerprinting
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Application for a Resident Producer License
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Business Entity License __ Most agencies start with Property & Casualty lines and often expand to Life and Health. Licensing costs typically range from $120–$349 per person, depending on the state, according to NAPA, with business entity registration fees generally between $100–$500.
Step 3: Write a Business Plan
A solid business plan helps you clarify strategy, attract partners, and set goals. Key components include:
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Target customers and market analysis
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Financial planning and projections
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Product offerings
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Carrier appointment goals
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Revenue forecast and break-even timeline
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Marketing and staffing strategy
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Risk management plan
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Defined key performance indicators (KPIs)
Agencies that begin with a clear business plan often experience faster revenue growth. Use the plan to assess funding needs and build credibility with carriers. Some models offer business planning support during training or as part of their expansion and growth planning process, helping you build a structured and goal-oriented approach from the start.
Step 4: Register Your Business and Protect It
To operate legally, you’ll need to:
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Form an LLC or corporation
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Apply for an EIN from the IRS
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Open a business bank account
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Purchase Errors and Omissions (E&O) insurance—generally $500 a year to start depending on the size and type of agency, location and services offered. E&O premiums typically increase as the size of your agency increases each year.
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File any local permits or state registrations
You may also need to register a trade name (DBA) if you plan to operate under a business name different from your legal name.
Step 5: Choose Your Technology Tools
Technology is essential for efficiency and client service. Minimum tools include:
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Agency Management System (AMS) to track policies and clients
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Customer Relationship Management (CRM) to manage lead pipelines
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Quoting software for instant rate comparisons
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Phone and VoIP system for communication
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Cloud storage and email security for compliance
In today’s digital-first landscape, even small agencies use platforms that integrate quoting, e-signature, client communication, and commission tracking. Another advantage of some models is that many of these tools and systems are often provided as part of the package—ready-made and proven, allowing you to hit the ground running with tested solutions.
Monthly tech costs typically vary depending on provider, scale, and whether you use bundled solutions included with some models.
Step 6: Set Up Your Office and Team
You can start:
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Remotely: A home office with a professional setup (Note: this isn't always feasible depending on the franchise path you choose, and many insurance carriers and even some technology/data partners won’t permit an agency to be remote.)
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In a shared workspace: Great for networking and flexibility (Note: many insurance carriers, franchisors and even some technology/data partners won’t permit an agency to share a location with another business.)
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Retail storefront: More visibility, more overhead
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Professional office space: More cost effective compared to retail space while still being compliant with insurance carriers.
Hiring may include:
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Licensed producers whose compensation can vary depending if they are salaried or on commission or a mix of both.
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Virtual assistants or support staff ($2,000–$4,000/month)
If you're solo at launch, use virtual tools for scheduling, quoting, and follow-ups until hiring is feasible.
Step 7: Get Appointed with Carriers
You need insurer partnerships to sell policies, and the process will vary based on the model you’ve chosen. Generally, there are three paths:
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Direct appointments with carriers, which is common for independent agencies and can be challenging for startups but yields higher commissions.
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Joining an aggregator or cluster group, a popular route for independents seeking faster access to multiple carriers without meeting direct production requirements.
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Franchise or captive models, where carrier relationships are typically pre-established, streamlining the process and reducing barriers to entry.
To get appointed, be prepared with:
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A clear business plan
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Proof of licensing
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Your E&O insurance documentation
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Target production goals and a description of your intended market
Step 8: Build a Marketing Plan
Consistent lead generation is vital. Your marketing plan should include:
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A detailed strategy to build referral relationships with professionals like real estate agents, auto dealerships, and mortgage brokers. These connections can create a steady stream of warm leads, especially during life transitions when clients are most likely to need new or updated insurance coverage.
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A professional, mobile-friendly website
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Google Business profile
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Social media presence (LinkedIn, Facebook, Instagram) includes posting strategy, connections, and engagement.
Add email marketing, referral campaigns, and review solicitation for long-term relationship building. Also consider creating marketing collateral for local events such as brochures, banners, and promotional items to increase brand visibility and credibility in your community.
Initial marketing spends: $1,000–$10,000 depending on market and strategy.
Step 9: Budget for Year One
| Category | Estimated Cost Range |
|---|---|
| Licensing & Legal Fees | $500–$2,000 |
| Technology | $360–$2,000 monthly* |
| Marketing & Branding | $1,000–$5,000 monthly |
| Office Setup | $0–$10,000+ |
| E&O Insurance | $500–$3,000 annually |
| Staffing (Optional) | $2,500–$10,000/month (if hiring additional team members) |
*The costs may include both initial one-time costs and recurring costs. Some models may include technology in their package fees. Many costs depend on number of employees or users, scope of work etc.
Sources: (Glovebox, Research.com, Total CSR)
It is recommended to include at least 6–9 months of cash reserves for expenses because it takes time to train, ramp-up new business and commissions can take 30–60 days to flow.
Step 10: Stay Compliant and Keep Learning
Insurance is a regulated industry, and maintaining compliance is essential. Make sure to:
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Renew your licenses and complete required continuing education (CE)
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Monitor carrier communications and regulatory updates
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Attend industry events and webinars
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Network with other agency owners and mentors
Most states require 24 hours of CE every two years, including ethics training, though requirements vary by state. Staying current with CE not only ensures compliance but also helps you adapt to industry changes and better serve your clients.
Source: StateCE – State-by-State Insurance CE Requirements
Final Thoughts
Starting an insurance agency requires more than just a license—it takes a commitment to strategy, service, and growth. Whether you start with a lean team or build quickly with more infrastructure, success comes from executing the fundamentals well.
Key reminders:
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Start with a clear model that fits your budget and goals
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Prioritize compliance and carrier access
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Build an effective tech stack and effective marketing strategy
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Track ROI and reinvest in scalable operations
With the right foundation, your agency can become a profitable, enduring business that grows with you over time. The opportunity is significant—and success is achievable with smart planning and consistent execution.
Ready to Start Your Journey?
If you're ready to take the next step and explore agency ownership with the support of a proven system, learn more about how to start with Brightway. Discover what it takes to launch your own agency with one of the leading names in insurance franchising.