New P&c Broker Needs Advice/referral

loudmouth · Post by **loudmouth** » Sun Dec 21, 2003 5:39 pm

I've just passed the California P&C exam and I've been doing extensive research on how to get started as an independent broker. But to my suprise I have found little info on the subject. Even industry association lack this information. I've looked at PIA, IIA, ...etc but was unablet to find such information. I am aware that it is difficult to get appointed as an agent in this hard market so I've been looking into another router to get my foot in the door. While doing some research I've found a page of MGA's.

Can anyone give me some info on how MGA's operate and types of commission rates expected. I assume that MGA's are a middle man for brokers. Based on this assumption I think this will be my best chance at entering the industry. Can anyone here give me info on specific MGA's that are willing to guide a newly licensed broker? I'm want focus on services to franchised and independent Hotels/Motels in California.

thanks

loudmouth · Post by **loudmouth** » Sun Dec 21, 2003 5:49 pm

Sorry one more thing. Most of the MGA's require E&O of $1 Million. Where can a newly license broker/agent get E&O w/o experience get affordable E&O. I thinking of joining PIA for this reason. Will I get a reduced premium if I am a member of this organization.

thanks and don't forget to answer my first question above

loudmouth · Post by **loudmouth** » Mon Dec 22, 2003 10:10 pm

Come on guys with 198 views not one of you has some advice. I'm sure all of you have been through this. What did you do? HOw did you get started?

gasoil2003 · Post by **gasoil2003** » Tue Dec 23, 2003 6:12 am

Working with MGA's in the last 3 three years has changed dramatically. We have seen are commisions drop as the companies try to improve there own profits. We are paid anywhere from 7.5 to 9% money. It's important when approaching an MGA to sell you concepts and well as your personality. It's important to have a target market with plenty of effective dates to offer. Also try to gaurantee a certian production goal. It's not easy getting your foot in the door but persistance will pay off. as far as the E & O is concerned insurance is not cheap anywhere and there are no brakes for the industries producers. Good Luck!

Snowman
Gas & Oil Insurance Brokers
http://www.fueloilinsurance.com

I hope this helps.

GuitarBuff · Post by **GuitarBuff** » Tue Dec 23, 2003 10:02 am

I think you are on the right path by choosing a niche market. I would highly recommend you research the market, the existing brokers that specialize in this class of business, the carriers that write the business, their distribution channels, and try to determine where you will be able to offer differentiation.

As for the MGAs, I have observed commission as high as 15%, and as low as net (no commission, you must add a fee to obtain any revenue). There are a lot of quality wholesalers, I would look for two or three that specialize in your niche market, and can help you acheive your goals. I have two firm beliefs on wholesalers:

1 - It is all about relationships. If the wholesaler can trust you to accurately represent the risk, you are more likely to get the trust of the wholesaler, and that will lead them to working hard for you. Wholesalers are also like retail brokers, they will spend time on the accounts that make them money. A high close ratio works to your advantage.
2 - With that said, never rely on just one wholesaler to deliver for you. People get busy, go on vacations, have other priorities, etc... I try to pick two wholesalers that can do the job, let them know they are competing for the business, and give them each a chance to win the business.

I hope this helps. GuitarBuff.

emiguy · Post by **emiguy** » Tue Dec 23, 2003 10:18 am

Re: your questions on being an independent broker. Most states require a broker bond, (+/- $50,000) I'm fairly sure California does as well, it would be less expensive to start your independent agency as an agent/producer, develop some book business in your specialty, and go from there. The carrier's or MGA's might be more receptive if your had some business to bring their way.

For E&O, check out Utica Mutual, POB 530, Utica NY 13503, (sorry, no tele #) New Hartford, NY, or S.H. Smith (shsmith.com). Both carriers offer $500k -$1mm CSL options; however don't expect to get away cheaply. If you do, let me know and I'll re-write mine. PIA is also a good source.

EMI GUY

loudmouth · Post by **loudmouth** » Tue Dec 23, 2003 6:26 pm

I'd like to thank all for their replies, they've been really helpful. As to the Broker bond I already purchased it(10,000) for california. If anyone else has some advice/suggestions please post or email me. I really would appricaite it.

Thanks again to all that have replied...Happy Holiday.

Sundance · Post by **Sundance** » Mon Dec 29, 2003 8:19 am

As far as E&O, I can tell you (at least in Texas) that going thru Big I and their E&O sponsored program is the best there is...price & coverage. I've been in "the biz" almost 30 years but hung out my own shingle in October 2002 and when shopping for E&O (as well as carriers) they were the best. They have so many programs (again at least here in Texas) that really help...commercial contracts, Work Comp and so on.

Check them out and I'm sure PIA has a similar deal (they just aren't in Texas any longer).

Good luck!

jjwiedem · Post by **jjwiedem** » Wed Jan 07, 2004 2:01 pm

Not sure why you would want to start your own agency from the start. I would think it makes more sense to align yourself with a good independent agency that would be able to provide the customer support and markets that you need to write business.

Using MGA's will limit your markets to mostly non-standard and surplus lines companies. In order to write good accounts you need standard markets and service to back it up. Your target market will demand standard national carriers or strong regionals.

Find a good agency and if you are aggressive (which it sounds like you are) you could work out a plan to buy in or buy out. Good luck to you it is a great career.