In an economic climate marked by uncertainty, independent insurance franchising is a bright spot for aspiring entrepreneurs seeking a business opportunity with long-term stability. No matter the economic picture, demand for insurance solutions—especially in the $362 billion personal lines market—is consistently strong.
With more than 83 million mortgages and more than 100 million registered automobiles in the United States, prospective customers are everywhere. Extreme weather conditions across the country have also emphasized the need for Americans to have the right home and auto insurance policies, as people look for ways to mitigate risk and protect their most valuable assets. The result is reliable lead flow for insurance entrepreneurs, even during times of recession.
For entrepreneurs interested in capitalizing on the opportunity in personal lines insurance, starting an independent insurance franchise is a great option to consider. Opening an insurance agency does not require prior experience in the insurance industry, making it a good fit for people from a wide variety of professional backgrounds. The franchise model also allows insurance franchisees to tap into the resources of a larger independent agency which can provide service support, technology tools, and connections with insurance carriers.
My journey to franchising
As an agency franchise owner, I’ve seen the benefits of a franchise firsthand. I previously led a family-owned insurance agency in Ohio, where I experienced the many challenges that come with managing an insurance business from soup to nuts. Business owners in this category have to wear many hats, including recruiting and managing a service team, maintaining carrier relationships, and building a book of business. The operational elements of the job require time and hard work, and often limit the amount of time a principal can spend on closing new clients.
After selling our family business in 2012, I took on other entrepreneurial ventures outside of the insurance space, working in the fitness and software industries while considering where I wanted to take my career next. After a few years, a colleague recommended I look into an insurance franchise opportunity. I took his advice and launched an independent insurance agency as part of the broader Goosehead Insurance network in 2018, this time on Hilton Head Island in South Carolina.
After just four years in business, I exceeded my five-year goal of selling $4 million in insurance premiums. After five and a half years, I exceeded my 10-year goal of reaching $10 million in premiums. Now, I’m targeting $25 million in premiums by year 10, and have brought on new employees, including my daughter, to support our growth.
If you’re considering a new entrepreneurial opportunity, here are four tips for launching a successful independent insurance franchise.
Starting an insurance franchise business
Tip #1: Decide how you want to spend your time
Some people are operational wizards. They love back-end work like spreadsheets, hiring, training, marketing, finance, and accounting. That said, if you’re like me, you may feel those tasks take away from the best part of the job: connecting with clients and selling policies. The good news is if handling operations doesn’t sound like how you want to spend most of your time, when you buy a franchise, you can pay a monthly franchise royalty fee to ease that burden.
For agency owners, this decision has a big impact on time-to-scale when starting an insurance business. Consider the “chicken-and-egg” problem when it comes to starting relationships with insurance carriers: you’ll need a book of business to get a carrier appointment, but you need carrier appointments to build a book of business. An independent entrepreneur could certainly build all the needed operational infrastructure from scratch, but it will take much longer than if you had an experienced operations partner.
Tip #2: Consider the benefits of a franchise network
In addition to receiving operational support, joining a franchise network allows entrepreneurs to tap into strong brand equity with an established agency. Good franchisors maintain standards to ensure that brand equity is preserved as new franchisees join, and franchise owners working under the same brand can learn from each other. In my experience, there’s been a sense of camaraderie instead of competition within my franchise network, and we’re able to work through common questions and challenges together with the support of the parent agency.
Having a shared network offers a helpful source of connections to strong talent as you grow your business. This is crucial in a jobs market where most young professionals are not typically considering personal lines insurance as a career path. I recently hired a great candidate who came out of my company’s corporate recruiting network, and may not have found them if I handled the process myself.
Tip #3: Choose a path that embraces market fluctuations
While demand for insurance is fairly steady, some markets can be more challenging than others. Insurance markets are cyclical, and hard markets are always followed by soft markets. Premium costs go up during hard markets, but those conditions generate demand and relationship-building opportunities for agency owners. In difficult markets, clients have an increased need for an insurance advisor. Big carriers may pull out of disaster-prone areas like Florida or California, leading clients to turn to local agents for their advice and to find the coverage they need.
Regardless of market conditions, there are everyday “life moments,” like adding a new driver, new home, or new child, that will require people to reconsider their insurance needs, presenting new opportunities for franchisees.
Tip #4: Cultivate a long-term business mindset
As with any business venture, it’s important to take a long-term view, and remember that “if it is to be, it’s up to me.” Having a partner helps lower barriers to entry, but you’re still starting your own business, and it won’t be successful unless you put in the work.
I had an advantage that I had a prior insurance background, but there’s room for people with no experience to learn the business if they are willing to put in the time. In my experience, there is a three-month learning curve to understand the industry well enough to launch, and mastery is attainable in one to two years with detailed study. Franchisors often provide training programs for aspiring agency owners, so take advantage of the opportunity to accelerate your path.
One of the benefits of having a long-term business mindset is the value of a recurring revenue model built on monthly premiums and annual renewal commissions, which provide a steady stream of income. This business model is incredibly valuable for maintaining long-term career stability, so entrepreneurs should stick with it and build momentum.
Should you start an insurance franchise?
If you’re considering a career change or are ready to become your own boss, an insurance franchise could be the right option for you. There’s tremendous opportunity for growth in an increasingly uncertain world, and a franchise partner can help you capitalize on it.
FAQs on starting an insurance franchise
What is an insurance franchise?
An insurance franchise enables entrepreneurs to open their own insurance business and tap into a proven business model while still maintaining the benefits of an established parent company.
Is an insurance franchise profitable?
Demand for insurance coverage will always remain steady, providing entrepreneurs with the opportunity to create reliable income and profit. Clients also renew their policies each year, earning insurance agents renewal commissions. This is especially beneficial in allowing insurance agents to maintain their stream of revenue even during difficult financial periods.
What are the benefits of starting an insurance franchise?
Everyone needs insurance, meaning everyone you talk to is a potential client. Starting an insurance franchise affords you the ability to grow a large book of business while helping your community by protecting individuals and families from financial loss due to unexpected events.
About the Author
Post by: Meg Herman
Meg O’Toole Herman has been a Goosehead Insurance agency owner since 2018. She is based in Hilton Head Island, SC.
Company: Goosehead Insurance
Website: www.goosehead.com
Connect with me on LinkedIn, X, and Facebook.
