Case Study

Direct Seller Case Study

1. Situation

PROLINK Broker Network was approached by an agent from a large direct seller who had found us online and said he was considering a move to the broker side. His father had announced his retirement and the agent knew that if he stayed with the direct seller there would be no legacy to pass on. He was also tired of being dictated to by one insurance market and having to follow whatever decisions they made. It was directly impacting his potential income. The company had just had a poor year and suffered significant losses so they had increased the rates, which limited the amount of business he could sell, and ultimately the amount of money he could make.

2. What were the barriers to making a move?

The candidate had two big barriers we needed to overcome:

  1. He was worried about leaving his comfort zone. The company provided him with a big support system from head office, taking away the admin headaches of running an office and allowing him just to focus on selling and servicing clients, which is what he liked to do.
  2. And then there was the money. The agent had been used to a certain income for many years, which provided a very good lifestyle. His kids were in private school, they had a cottage and the family took a couple of vacations each year. He was worried about how he’d carry these expenses, when his income went down to zero.

We scheduled an initial meeting to explain what PBNet offered and how we could help him make the transition. We told him that while there were no guarantees, long term he could achieve the same level of income he had with the direct seller but with two key differences: he would have the independence to run his own show and a legacy he could pass on to the next generation or even sell. While PBNet could provide him with support at many levels, ultimately his success would depend on his ability not just to sell insurance, but to manage the business.

3. How did we help?

Once the prospective broker had agreed to the terms of the contract, we walked him through the processes of transferring his licenses from General Insurance to Registered Insurance Brokers of Ontario, setting up all of the legal requirements, setting up the Ministry of Transportation access, getting organized with the insurance carriers, along with the general set up of his office so that he could operate as a brokerage.

Finally, PBNet set up the meetings with individual insurance carriers who trained the broker on their unique products and services and web portals and confirmed that they would continue to provide extensive support when needed. Finally, we assisted him in obtaining financing, through a line of credit to help offset the initial lean years.

5. How long did it take?

Rome wasn’t conquered in a day. It took this new broker 8 weeks to get launched and learn the different systems and products so that he could start placing business. It was something new for him so he had to go back and learn his craft as if he was going back to school. The first few policies required extensive help from PBNet, and we kept a close eye until he had placed policies with multiple markets. After three months the change was dramatic. The stresses he was under in week one were gone because he could quote and place business much faster. He had income coming in and was starting to feel the weight off his shoulders.

6. Lessons learned

This agent did a number of things right and followed many of our recommendations. One, he downsized as much as possible to reduce his burn rate. He had to make tough decisions about reducing staff but that allowed him to become cash flow positive sooner. Two, he brought in an CSR with current broker experience who could help them with documentation, filing, and a good understanding how to navigate the system. Three, he had some savings and was able to reduce his personal expenses so the lack of salary or profits in year one didn’t hit his family life too hard. The line of credit helped but he needed most of that just to run the business.