So You Want to Start Your Own Insurance Agency?
On October 10, 1990, I started The Addis Group, an insurance brokerage and risk management consulting firm in King of Prussia, PA. No name, no revenue, no carriers, no customers, no reputation: only a dream, a network of supportive friends and a unique process.
Although it has been over 25 years, it seems like only yesterday that The Addis Group began. What was the “recipe for success”? In 1990, the following ingredients helped me answer the question “So you want to start your own insurance agency”?
Network: In assessing the opportunity for success, I went to my network (i.e., centers of influence and friends) to solicit their opinions. I asked each person three questions:
- Would you stand behind me?
- Would you refer me?
- Would you become a client?
The answers were all positive.
Value Proposition: I needed a unique “value proposition” – a process that was different from any other firm in the Philadelphia region. This was necessary to attract and retain insurance carriers, staff and clients. I also knew that my Network would be able to generate referrals if I armed them with a powerful, compelling story about The Addis Group’s approach.
Marketing and Business Plan: Essential to the endeavor was the crafting of a Marketing and Business Plan – a road map for the future of the firm. This document also helped secure a credit line as well as attract insurance carriers.
Insurance Carriers: Insurance carrier partners were critical to the evolution of The Addis Group. The firm could not exist without a handful of top notch insurance companies who embraced The Addis Group’s unique process. I was aware that attracting these carriers was going to be a significant challenge that would require insurance premium volume commitments.
Family Support: This was a huge consideration. Before venturing out on my own, I met with my wife (Bobbie) to confirm that I had her support. In October, 1990, we had two boys (Andrew, age 9 and Jeffrey, age 7) and a third child on the way. Bobbie and I thought deeply about the potential impact on our family as a result of the time and energy it would take to get the business off the ground. We also measured the financial risk factor. Fortunately, Bobbie was a registered nurse who was willing to do what it took to help the cash flow.
Passion and Purpose: Last but not least, I had a passion and purpose to design a futuristic agency that would develop business through a unique business model. At 34 years old, I had energy, determination, focus and drive. I also had a heavy dose of fear. I have come to learn that fear is an incredible motivator. It was my daily gut check that got my engine running.
The first few weeks were overwhelming. So much to do with so little time. Company name, logos, business cards, office space, credit line, health insurance, licensing, computer system, office equipment and so much more. Researching a top notch team of professional advisers including legal, accounting, banking as well as preparing marketing and business plans for the insurance carriers.
Now to the staff. I was able to attract two outstanding individuals who shared my dream and vision. One was an energetic, polished 26-year-old professional who had underwriting experience and a multi-talented, dedicated, experienced individual with brokerage experience and administrative capabilities. Both loved the “recipe for success” and understood the risk issues.
I had anticipated an uphill battle in attracting insurance companies. Little did I know how difficult this task would be. Meeting after meeting with Chubb, Fireman’s Fund, Hartford and others. Each carrier asked for a significant premium volume commitment and questioned our ability to build a firm. To respond to their issues, we put together a powerful Advisory Board to stand behind The Addis Group. The Board consisted of business leaders representing a cross section of skills ranging from marketing to banking to legal to finance. This move gave carriers comfort that The Addis Group was going to succeed.
The spectrum of emotions that we experienced in year one went from exhilaration to disappointment. Importantly, we never took our eyes off of our goals. The recipe for success was built upon providing comprehensive Risk Management Audits three to four months after the insurance policy renewal. Instead of starting with the traditional “bidding process,” The Addis Group focused on a 4-step process to identify and measure risk. We invested countless hours with our prospects to improve their “Risk Profile” before negotiating the insurance transaction. If a prospective customer did not want to invest time to go through our diagnostic, audit process, we simply placed them on our mailing list and moved on.
In year two we gained confidence. The carriers loved our approach. They were seeing outstanding hit ratios and loss ratios. They also felt part of our team. In year three we fine tuned our marketing materials, prospect research and approach to developing business. We also built our Mission Statement and Guiding Principles.
Our five Guiding Principles were:
- Deliver significant value so our clients view our relationship as an investment – not a cost.
- Character and integrity are the cornerstones of business trust. They shine through – particularly in tough times.
- Be innovative and differentiated. Bet on our vision for the future. Imitate only as a last resort.
- Surround ourselves with people who care – a lot. Seek people with ambition, intelligence and motivation.
- Our goals are our client’s dreams with deadlines!
Years 3 through 5 were exhilarating. We reinvested every penny back into the organization to attract talent, build technology and position ourselves within the community. The recipe was working to perfection. All of our stakeholders – Clients, Staff, Carriers, Centers of Influence and Community — were fueling our growth and success. These stakeholders saw us as something unique.
Community recognition followed. The Addis Group was a Philadelphia finalist for Inc. Magazine’s Entrepreneur of the Year Award. The Philadelphia Business Journal described the award as the “nation’s most prestigious recognition for leaders of some of the region’s hottest entrepreneurial companies”. The Addis Group was placed in “Philadelphia 100” – the fastest growing privately held companies in the Philadelphia region. And the firm was recognized as the Greater Philadelphia Chamber of Commerce “Business of the Year”, as well as National Underwriter Magazine “Agency of the Year”.
As I look back upon the early years, there is no question that we would not have achieved success without the design and development of our network, value proposition, business plan, family support system, insurance carriers and passion and purpose.
Do you want to start your own business? The experience of The Addis Group gives evidence that it can be achieved. However, you must start by asking yourself the following questions:
- Do I have a network of centers of influence and friends who will stand behind me, refer me and become clients?
- Do I have a unique “value proposition” to differentiate myself within the marketplace?
- Does my marketing and business plan lay out a road map for future success?
- Is my family supportive?
- Will I be able to attract insurance carrier partners?
- Do I have the purpose and passion to build this enterprise?