Start Up P&C Brokerage

[Aries3883]

Just wondering if anyone else has ever gone through something like this.

I'm leaving my current job at an insurance brokerage to start up my own. If I call up some the companies I currently deal with right now at my current job, whom which I have long standing relationships with underwriters, customer service reps, and marketing reps, will they call my current job and notify them, and perhaps even deny me an appointment with them based on my prior employement history.

I don't want any hard feelings between my old boss and myself, but I'd rather take my clients and be my own boss. Is it possible when I speak with them, they might even ask my boss permission before they open me up?

Any one here have experience with something like this or has left there current job at a brokerage or agency to go open up their own?

[scott]

When you say take the clients I assume you mean buy them from the agency.

Your tone makes me think that this is not the case. Perhaps I am wrong.

Employees do not own clients. The brokerage owns the client. Employees are paid to attract and keep clients. Assume your current owner will fight (as he/she should) to keep the clients.

Perhaps I misunderstood your position.

As to insurance companies, they will do what is in their best interest. If your current employer is valuable, they will protect that relationship. If you have the potential to be more valuable, they will support you.

Most insurers are not looking to appoint newly formed agencies.

Do you want to own your own agency or do you want a piece of the pie? There are other ways besides starting an agency from scratch. Can you talk with the boss and work out an equity deal that allows you access to markets? The best of both worlds?

[Aries3883]

Thanks for the reply, there is more to the story.

My current contract states that all the clients I bring in are mine, so I'm really an in house producer, but I also service the companies clients as well as clients other producers bring in.

My old boss retired, left his partner in charge, who is now my current boss. My new boss took on a new partner who now wants us to sign non-compete contracts that states all clients brought in by producers are the companies, not the producers. I obviously don't like this, so I've decided to go on my own.

My main concern is that the insurers I work with now will call up my new boss and deny us based on what he says. My partner is an attorney with a large amount of clients, so obtaining new business shouldn't be a problem. I would like to place them directly through insurers and not with general agents, but I'll do what has to be done

[scott]

Ten years ago I was in a similar place. I looked at the same options you are looking at and decided that building an insurance consulting firm was the right way for me to go.

My own work and what I see in the consultants I mentor says that there is a great market for good insurance people to provide advice on a fee basis rather than earning a commission.

Another avenue to consider. Always glad to talk off line about the advantages and disadvantages.

[JackJM]

It is now almost 10 years since I left my last employer and formed my own agency. They had always been more than fair with me so, it was a difficult decision to leave. However, since it was something I always wanted to do, the compulsion outweighed the regrets.

I did not have a contract with my employer. All of the clients I had while at that agency where ones that I brought in. When I discussed leaving with them, I told them I would be notifying my clients accordingly and asking them if they would like to go with me. All, but one, said yes ( she really liked the CSR who handled her account).

In the intervening years, I have never knowingly solicited any of my former employer's clients. One, that I always serviced, called me and asked that I stop by to review things. I did, but made certain I didn't do anything to upset the existing relationship. To do otherwise would be unethical.

Depending on the relationship I had with the company reps, I found most were very understanding about my desire to start my own agency and kept the information confidential. If I didn't feel the rep could kept my plans to him/her self, they were not approached.

A small NY mutual was my first appointment. This was helpful in securing an appointment with Zurich. Attaining those two companies, helped me get a third appointment with a small regional insurer. Finally, within the first 6 months, I was able to get an appointment with MetLife Auto & Home. I think Met is amendable to new agencies due to the entrepreneurial nature of the company.

I don't know the type of business that makes up your book. But, if it is mostly Personal Lines, Met could be a fine choice. Don't overlook any small one-state,only companies either. Many times, they can actually do more than you expect and can be very supportive.

Erie Insurance looks for smaller agencies, or books of business. That company may be worth a contact.

Progressive seems to be in a growth mode for independent agent representation.

Lastly, my agency belongs to a partner program that operates in NY,CT,MA,PA,NJ,RI,ME,NH,VT. Depending on where you are located, such and arrangement might prove very beneficial. SAN comes to mind as a national program worth looking into.

good luck

[gregcw]

Thanks ........
My current contract states that all the clients I bring in are mine, so I'm really an in house producer, but I also service the companies clients as well as clients other producers bring in.
.......My new boss took on a new partner who now wants us to sign non-compete contracts that states all clients brought in by producers are the companies, not the producers. I obviously don't like this, so I've decided to go on my own.

Is the new partner aware that for a non-compete/non-piracy agreemnet to be enforcable that it must be agreed to at least thirty days prior to employment or have a valuable consideration given at the time of the agreement. You don't say what your relationships with the field reps for the companies you are working with are. That would seem ot me to be more important than what the current pincipals, especially the new partner, have to say since I'm certain that they would be aware of the changes in the agency.

As to insurance companies, they will do what is in their best interest. If your current employer is valuable, they will protect that relationship. If you have the potential to be more valuable, they will support you.....
......Do you want to own your own agency or do you want a piece of the pie? There are other ways besides starting an agency from scratch. Can you talk with the boss and work out an equity deal that allows you access to markets? The best of both worlds?

Your post does not say what area you are in. My thought is that, if you are in a large metropolitan area, that the location of your office in relation to your current employers would be more critical to them than the current empolyers opinion. You would also want to compile information such as the loss ratios, customer retention and premium volumes of the book that you're taking with you. I think that they'd like to keep your relationship with the insured's in order to retain that business. Regardess of the area, scott's comment on talking with your current principal is good. Doing that will ensure a good working relationship with them and that there is no backstabbing or negative opinion being generated by them.

[LadyBroker]

I would be super careful about taking any proprietary information when you walk out the door. In California, the non compete clause doesn't really carry water, but they can enforce the No Contact part...and by knowingly taking insured information, you could have a real fight on your hands. You could eventually win, but at what cost to you?

I am a little puzzled why you think the insurance companies would place so much weight on what your former employer says about you, as far as granting an appointment. I would think the carriers are going to appoint YOU based on your past relationship with them, not on what your old boss says. Plus, your old boss has to be careful not to impede your right to free commerce. Unless there is something negative that they can really say, and make stick. If that's the case, I might work on cleaning that up first.

Good luck to you!

[Aries3883]

Is the new partner aware that for a non-compete/non-piracy agreemnet to be enforcable that it must be agreed to at least thirty days prior to employment or have a valuable consideration given at the time of the agreement. You don't say what your relationships with the field reps for the companies you are working with are. That would seem ot me to be more important than what the current pincipals, especially the new partner, have to say since I'm certain that they would be aware of the changes in the agency.

I was unware of this thirty days prior to employement that you brought up. I've asked my lawyer and searched online and have no seen anything. If this is true what would my employer's valuable consideration be? employement? I'm already employed.

I deal mainly with personal and few commercial clients. I'm in metro NY, so theres plenty of room for everyone to play, and I won't be next door to him, i'll be a good 15 minute drive away on the other side of the borough.

Thanks for your comments guys, I figured I couldn't be the only guy who ever thought to leave and start his own office

[LadyBroker]

The valuable consideration would be that you remained employed. I worked for a small brokerage that was purchased by a large alphabet house. Prior to the purchase, we did not have any sort of producer contracts. Upon close of the sale, we were given 30 days to sign the non-compete agreement. Several chose not to sign, and went off to start their own deal. The ones who did remain, including myself, signed, and that was a condition of our employment.

In my humble opinion, though, I would not be all that comfortable going out on my own with only a Personal lines book of business. That is fairly labor intensive, and smaller premium base, so smaller commissions. Can you hold on for another year and build a bigger commercial base?

[wlunday]

Gregcw is right about the additional consideration. I've seen several cases here in WA where the new owners try to clean-up the employment contracts with standard language, including non-compete and no piracy clauses. In every case, the courts found that in order for the new owner to impose restricted terms of employment there must be substantial consideration offered. A raise, a bonus, or perhaps an ownership position in the agency itself.

Aries3883 you might consider talking with the new owner about a possible ownership position in your current agency. That way they can keep a seasoned producer, provide a perpetuation opportunity for when they want to retire, and you get a good boost as well. Doesn't hurt to ask???

Wayne Lunday, LUTCF, CLU, ChFC

[Aries3883]

Small update here.

I did it! I started my own brokerage/agency.

It's pretty slow right now, trying to get appointments with companies, some are very lax, like progressive. They completed their application, got a response, now I have to wait up to 30 days for contact from the marketing rep in my area.

Other companies like Travelers and some general agencies have been very accommodating.

Can anyone recommend an insurer that will open up a new agent?

Wish me luck!

[jack1978]

Best of luck to you. WHere are you located?