Question 1

Q1. How much does it cost to create an insurance agency?

Accepted Answer

Ans. The cost to create an insurance agency typically ranges from $1,000 to $10,000 depending on location, licensing fees, software, office setup, and marketing budget. Home-based agencies cost less, while brick-and-mortar agencies require more upfront investment.

Question 2

Q2. Do I need a license to start an insurance agency?

Accepted Answer

Ans. Yes. You must have a state-approved insurance producer license and an agency (business entity) license. Requirements vary by state but usually include pre-licensing education, passing an exam, background checks, and maintaining E&O insurance.

Question 3

Q3. Can I start an insurance agency with no experience?

Accepted Answer

Ans. Absolutely. Many successful agency owners began with no previous insurance background. You just need proper licensing, training, carrier appointments, and a solid business plan. Experience helps, but it is not mandatory.

Question 4

Q4. How do insurance agencies make money?

Accepted Answer

Ans. Insurance agencies earn money through commissions from insurance carriers. These include new business commissions, renewal commissions, overrides from hired agents, and sometimes bonuses. Renewals create ongoing, passive income each year.

Question 5

Q5. How long does it take to build a profitable insurance agency?

Accepted Answer

Ans. Most agencies begin earning consistently within 6–12 months. A strong book of business is typically built over 2–3 years, while a highly profitable, scalable agency often takes 3–5 years depending on marketing efforts and carrier partnerships.

Question 6

Q6. Is it profitable to own an insurance agency?

Accepted Answer

Ans. Yes. Insurance agencies are considered one of the most lucrative and recession-proof businesses. Because of high retention and renewal commissions, profit margins can exceed 40–60%, and successful agency owners often earn six or seven figures.

Question 7

Q7. What are the first steps to create an insurance agency?

Accepted Answer

Ans. The first steps include obtaining your producer license, choosing a business structure (LLC or corporation), registering your business, getting E&O insurance, applying for an agency license, and securing carrier appointments.

Question 8

Q8. Do I need an office to start an insurance agency?

Accepted Answer

Ans. No. You can start an insurance agency from home or operate it virtually using CRM and AMS software. Many new agencies are fully online, reducing startup costs and increasing profitability.

Question 9

Q9. What type of insurance should a new agency sell?

Accepted Answer

Ans. Popular and profitable lines for new agencies include auto insurance, home insurance, commercial policies, life insurance, and specialty lines. Combining personal and commercial lines helps diversify your revenue.

Question 10

Q10. What is the difference between an insurance agency and an insurance brokerage?

Accepted Answer

Ans. Agencies typically work with multiple carriers (independent) or a single carrier (captive), while brokerages focus on placing coverage with the best market for clients—often specializing in commercial insurance. Both earn commissions but differ in structure and regulatory requirements.