How to start an insurance agency

The path from no license to an agency writing policies, in order: the producer license for each line, the agency license, carrier appointments, the money rules, Medicare compliance and the first clients, with every agency named. The finding most new owners miss: a license sells nothing on its own, because Florida and Texas both require a carrier appointment before you transact, and Texas will not license the agency itself until it shows $250,000 of E&O cover or a $25,000 bond.

By Niomi AscotUpdated October 3, 202615 min read

License: Issued by each state, line by line; a carrier appointment is needed before you sell that carrier's policies
California: One 12-hour ethics and Insurance Code course since January 1, 2026 (AB 943)
Florida: 200 hours of coursework for general lines (or a year of qualifying work), 60 for personal lines, 30 for life
Texas agency: $50 application, a licensed officer as DRLP, and $250,000 E&O or a $25,000 bond (as of October 2026)
Medicare: Annual plan training with an 85% test score; every sales call recorded and kept six years
Workforce: 568,800 insurance sales agents in 2024; $62,280 median wage in 2025 (BLS via O*NET)

What an insurance agency is, captive or independent

An agency sells policies written by insurers and is paid by them. The lines are the familiar ones: auto, home, renters and umbrella on the personal side, commercial policies for businesses, life and health, and for many offices Medicare and ACA Marketplace plans. Before the first license application, decide which of two shapes you are building.

Captive. You sell one carrier’s products under its brand, with its systems, training and rules. The IRS even names “a full-time life insurance sales agent whose principal business activity is selling life insurance or annuity contracts, or both, primarily for one life insurance company” as a statutory employee for some taxes (IRS). The carrier’s agreement decides what you own when you leave and what marketing you may run on your own.

Independent. You hold appointments with several carriers and sell under your own name. IA magazine’s report on the 2026 Agency Universe Study counts about 37,000 independent agencies, averaging 9.9 employees and 19.7 carrier appointments in 2025. The Big “I” 2026 Market Share Report says “the independent agency channel places 62% of all p&c insurance written in the U.S.”, including 87.7% of commercial lines premium.

Between the two, many new independents join an agency network or cluster to reach carriers that will not appoint a startup on its own volume, and some buy an existing book rather than start at zero. We have no published data on either route, so weigh them against what the carriers you want will actually offer you.

Agencies are small businesses. The Census Bureau’s County Business Patterns counted 133,728 insurance agency and brokerage establishments with paid employees in 2023, and 72.3% of them had fewer than five employees.

The outlook

Bureau of Labor Statistics data on O*NET shows 568,800 people employed as insurance sales agents in 2024, a 2025 median wage of $62,280 a year, and average projected growth of 3% to 4% from 2024 to 2034, with 47,000 openings over the period. O*NET flags the occupation as a Bright Outlook and lists “Insurance Sales Agent” as a Department of Labor title for Registered Apprenticeship programs.

Price changes drive shopping. The BLS consumer price index for motor vehicle insurance rose 50.9% from August 2021 to August 2024 and fell 5.1% from August 2025 to August 2026 (our arithmetic on the published index). Big swings in either direction send households looking for a second quote, and an agency that answers the phone well wins some of them. Agencies are also still growing: “as many as 3 in 4 agencies saw revenue increases between 2024 and 2025”, IA magazine reported.

Licensing: line by line, state by state

There is no federal insurance license. Each state’s insurance department licenses producers by line: property, casualty, life, accident and health, and narrower lines such as personal lines. Once your home-state license is active, nonresident licenses in other states go through NIPR, where you “apply for, renew and manage your insurance licenses.” Texas, for example, wants “an active general lines, property and casualty license in good standing in your resident / home state” before it issues a nonresident one (TDI).

The three states below show how far the rules drift. Fees and hours are as of October 2026; confirm them with the department before you pay for a course.

State	Agency	License	Key requirements, as the agency states them
California	Department of Insurance	Property, casualty, life, accident and health, personal lines and limited lines auto licenses	Since January 1, 2026, one “12-Hour PRE course” of ethics and the Insurance Code, including one hour on fraud, covers every listed license type. Certificates “expire three years from the completion date.” 24 hours of continuing education per two-year term, three of them ethics. Fees were not published on the pages we could open
Florida	Department of Financial Services	General lines (2-20), personal lines, life	General lines: 200 hours of approved coursework with 3 hours of ethics, or a year of qualifying work, or a year as a licensed customer representative plus 40 hours. Personal lines: 60 hours. Life: 30 hours. Age 18, a Florida resident, and a place of business “identifiable by and accessible to the public”
Texas	Department of Insurance	General lines property and casualty; general lines life, accident, health and HMO	Pass the Pearson VUE exam first, then fingerprint through IdentoGO and apply “within one year of passing the exam.” $50 agent application. The license steps list no pre-licensing course. CPCU holders skip the exam

California’s 2026 change. Insurance Code 1749, as amended by AB 943 effective January 1, 2026, requires applicants for property, casualty, life, accident and health, personal lines and limited lines auto licenses “to complete 12 hours of study on ethics and this code.” One course serves several license types. Some schools still sell longer packages built for the old rules, so check what the law asks for before you buy one. Two add-ons remain: “an initial eight (8) hour annuity training course prior to selling annuities”, and “eight (8) hours of long-term care training” in each of the first four years for long-term care sellers (CDI). Continuing education is “24 hours of instruction, of which three hours shall” be ethics (Ins. Code 1749.3). Once licensed, your license number goes on “business cards, written price quotations for insurance products, and print advertisements” in type at least as large as your phone number, and in “the emails the person sends that involve an activity for which a license is required” (Ins. Code 1725.5).

Florida. The longest classroom path of the three. Fla. Stat. 626.732 sets the general lines hours and exempts CPCU holders, and says “prelicensure coursework is not required for an applicant who is a member or veteran of the United States Armed Forces or the spouse of such a member or veteran.” Life agents need “30 hours of coursework in life insurance, annuities, and variable contracts” (Fla. Stat. 626.7851). The public place of business comes from 626.731, so a general lines agent cannot run the license from a mailbox.

Texas. The quickest individual path, and a stricter agency license (see setup, below). The life, accident, health and HMO license follows the same exam, fingerprint and $50 application steps.

Appointments: the license alone sells nothing

The step new owners underestimate comes after the license. Florida says no one may “act as, or advertise or hold himself or herself out to be an insurance agent” unless “currently licensed by the department and appointed by an appropriate appointing entity or person” (Fla. Stat. 626.112). The state’s Department of Financial Services adds that “all licenses require an appointment with the exception of insurance agency licenses.” Texas: “All appointments must be filed with the department before any agent transactions are performed” (TDI).

A captive agent gets the appointment with the job. An independent has to win each one, and in our experience carriers look at experience, the book you expect to write, your E&O and sometimes a production commitment before appointing a startup. Line up the carriers you need for the lines you plan to sell before signing an office lease. If the ones you want say no, a network or cluster may be the faster path to market.

Medicare: the CMS rules for agents

Medicare Advantage and Part D are federal products sold under federal marketing rules, on top of the state license.

Licensed and appointed in the state. Plans may use as marketing representatives “only individuals who are licensed by the State” and whom the plan has reported as appointed (42 CFR 422.2272).
Training every year. Plans must “on an annual basis, provide training and testing to agents and brokers”, and agents must “achieve an 85 percent or higher on all forms of testing” (42 CFR 422.2274).
Pay set by CMS. Compensation for independent agents is tied to a fair market value that CMS publishes; from contract year 2025, “for each enrollment in a renewal year, MA organizations may pay compensation at 50 percent of FMV.” Plans must have the next year’s compensation structures in place by October 1. Referral payments “may not exceed $100” into an MA plan and $25 into a drug plan.
The disclaimer. An agency that does not offer every plan must say “We do not offer every plan available in your area”, with the number of organizations and products it represents, on its website, in electronic messages and print, and aloud “prior to the discussion of any benefits” (42 CFR 422.2267).
Contact and records. No unsolicited door-to-door visits, social media direct messages, cold calls, texts or voicemails (42 CFR 422.2264). A Scope of Appointment is recorded before the sales talk and is “valid for 12 months.” Every marketing and sales call is “recorded and retained in their entirety for a minimum period of 6 years” (422.2274), and since October 1, 2024 beneficiary data passes to another marketing organization only with written consent listing each recipient.

Build all of this into the phone system, the booking form and the scripts before you sell your first plan.

Setting up the agency

Entity and agency license. The SBA explains that a sole proprietorship is the default and an LLC combines features of corporations and partnerships. Many states also license the agency itself. A Texas resident agency must register with the Secretary of State and name a designated responsible licensed producer (DRLP), “at least one officer or active partner who holds a Texas general lines - property and casualty license”, and pay its own $50 application (TDI).

Texas proof of financial responsibility. The agency needs “a bond in the principal sum of $25,000” or “a $250,000 Errors & Omissions policy, with a deductible of not more than 10% of the full amount of the policy”, in a name that “must match the entity’s full legal name from the Texas Secretary of State registration” (TDI). Form the entity first, then bind E&O in exactly that name.

EIN. Free online from the IRS, after the state has formed your LLC or corporation.

A premium trust account from day one. Premiums are not agency revenue. In Florida, premiums an agent receives “are trust funds received by the licensee in a fiduciary capacity” (Fla. Stat. 626.561). In California, a licensee who “diverts or appropriates those fiduciary funds to that person’s own use is guilty of theft” (Ins. Code 1733). Open a separate account for premiums before the first check arrives, and have your accountant set up how commissions move out of it.

Insurance for the agency.

E&O. Professional liability pays for “financial loss as a result of malpractice, errors, and negligence”, in the SBA’s words. Required for a Texas agency unless it posts the bond, checked by Google for Local Services Ads, and in our experience asked for by carriers before they appoint.
General liability for an office clients walk into.
Cyber. You hold driver’s license numbers, financial details and health information. No rule requires a cyber policy, but IA magazine reports more agencies selling cyber, so know it from the buyer’s side.
Workers’ compensation. Florida requires it outside construction once “four or more employees are employed by the same employer” (Fla. Stat. 440.02); “Texas doesn’t require most private employers to have workers’ compensation” (TDI). Check your own state’s rule.

Startup costs. No published estimate with a stated method was found, so none is given here. In Texas the department’s own fees are $50 for each producer and $50 for the agency, with exam and fingerprint fees paid to vendors; the bigger costs are E&O, the agency management system, rent and the months before commissions build.

Equipment, office and software

From experience rather than a sourced list:

An agency management system for clients, policies, commissions and documents, and a comparative rater if you write personal lines with several carriers.
Carrier portals and e-signature. Each appointment brings its own logins and quoting tools.
Phones that record. For Medicare that is a federal requirement, and it settles disputes in every line.
A real office where the law or Google expects one. Florida’s general lines rule asks for a public place of business, and Google will not list a virtual office.

Commission and cash flow

Carriers file the premiums; the agency earns commission on what it places. Rates vary by carrier and line, and we found no published source we would quote, so none appears here. Medicare is the exception, where CMS’s fair market value sets the ceiling and renewals pay half.

Plan for slow early income. New business commission arrives after a policy binds and premium is paid, in our experience life and health commissions can be charged back if a policy lapses early, and the value of an agency is the renewals that build year after year. Florida limits what you can give away while building that book: life and health agents may not use “free,” “no cost” or similar words in ads, and giveaways are capped at “a total value of $100 or less per insured or prospective insured in any calendar year” (Fla. Stat. 626.9541).

The calendar is set by federal dates. Plans may market next year’s offerings from October 1 (42 CFR 422.2263), Medicare’s Open Enrollment runs October 15 to December 7, and the Medicare Advantage Open Enrollment Period runs January 1 to March 31 for people already in a plan (Medicare.gov). The Initial Enrollment Period “lasts for 7 months, starting 3 months before you turn 65” (Medicare.gov), so birthdays feed a Medicare office all year. HealthCare.gov opens Marketplace enrollment on November 1 and closes it January 15 (HealthCare.gov). Our insurance agency marketing page shows how the P&C months fit around those.

Hiring producers and staff

Licensed staff for licensed work. Florida’s 626.112 applies to customer representatives as well as agents, so quoting and binding need a licensed, appointed person. Unlicensed staff handle clerical work.
Growing your own producers. Florida lets a year as a licensed customer representative plus 40 hours of coursework stand in for the 200-hour general lines course, a practical ladder from service desk to producer. O*NET’s apprenticeship title offers another structure.
Employee or contractor. The IRS test turns on “the right to control the details of how the services are performed” (IRS). Ask your accountant before writing a contractor agreement for a producer.
Medicare staff each pass the plan’s training and test at 85% or higher every year.

Finding the first clients

Your own network, then your book. A new agency starts with family, former colleagues and referral partners such as mortgage lenders, real estate agents and auto dealers; check your state’s rebating and inducement rules before paying anyone for a referral. Once you have clients, CMS lists as permitted contact “agents/brokers calling clients who are enrolled in other products they may sell, such as automotive or home insurance” (422.2264), so a P&C book becomes a Medicare list.

Google Business Profile. Google names “insurance or real estate agents” among individual practitioners who may hold their own profile, and its sample branded title is an insurance agent: “‘Allstate: Joe Miller’ (if Joe is the sole public-facing practitioner at this Allstate-branded location)” (Google guidelines). “Sales associates or lead generation agents for corporations aren’t individual practitioners and aren’t eligible.” A captive agent should check the carrier’s naming rules first. Google recommends video verification where offered (Google). Our Google Business Profile service covers the setup.

Local Services Ads, in two states. Google lists “Insurance agency (currently available in California and Florida only)”, screened with business and owner checks, professional liability insurance and state business and owner licenses, plus a verified profile (Google). Insurance was not in the August 2026 first phase of the move into Google Ads; remaining categories follow in 2027 (Google Ads Help).

Reviews. Fewer than 20 reviews is enough for 47% of consumers to rule a business out, according to BrightLocal’s 2026 survey. Ask every new client after the policy binds, the same way each time, and never pay for a review.

Calls and texts. In January 2025 the 11th Circuit vacated the FCC’s 2023 one-to-one consent rule (Insurance Marketing Coalition v. FCC). The older requirement stands: autodialed or prerecorded telemarketing needs “prior express written consent”, meaning “an agreement, in writing, bearing the signature of the person called”, and numbers on the national Do Not Call registry are off limits unless an exemption applies, such as a relationship lasting “eighteen (18) months” after a purchase (47 CFR 64.1200). The FTC puts the exposure at “a civil penalty of $53,088 for each violation.” For Medicare, cold calls and texts are banned regardless.

Bought leads and social ads. EverQuote’s 2025 annual report describes a marketplace with “approximately 60 insurance carriers and approximately 6,000 agents”, so a new agency buying shared leads competes with carriers for the same shopper. On Facebook and Instagram, US insurance ads have run in Meta’s financial products and services special ad category since January 21, 2025, with age, gender and ZIP targeting removed (Meta). For search campaigns built around those limits, see how we run Google Ads.

What trips up new agency owners

Licensed, not appointed. Months of study and still nothing to sell, because no carrier has signed on.
Commingled premiums. Paying rent from the premium account is theft in California and a fiduciary breach in Florida.
E&O in the wrong name. Texas matches the policy to the Secretary of State registration word for word.
Bought leads without consent records. Ask every vendor for the record before you dial.
Medicare gaps. A missing disclaimer, an unrecorded call or no Scope of Appointment, found in an audit.

Questions about starting an insurance agency

Do I need a license to start an insurance agency?

Yes, an individual producer license for each line you sell, from each state you sell in, and in many states a separate agency license with a licensed officer responsible for it, such as the Texas DRLP. Then each carrier has to appoint you.

How long is pre-licensing in California now?

It is one 12-hour course on ethics and the California Insurance Code, including an hour on fraud, since January 1, 2026 under AB 943. Annuity and long-term care sellers add eight-hour training courses.

How many hours does Florida require?

Florida requires 200 hours for a general lines license, or a year of qualifying work, 60 hours for personal lines and 30 for life. Military members, veterans and their spouses are exempt from the coursework.

Do I need E&O insurance to open an agency?

In Texas, yes: a resident agency needs a $250,000 E&O policy with a deductible of no more than 10%, or a $25,000 bond, in its exact legal name. Elsewhere it is commonly asked for by carriers and by Google for Local Services Ads.

Should I go captive or independent?

Captive suits someone who wants one carrier’s brand, products and support and accepts its rules; independent suits someone who wants several appointments and their own name. The average independent agency holds 19.7 appointments, according to the 2026 Agency Universe Study.

Can I sell Medicare plans as soon as I am licensed?

No, you also need an appointment with each plan and must pass its annual training and test at 85% or higher. Then the CMS rules on the disclaimer, contact, Scope of Appointment and call recording apply to every sale.

Can I call or text the leads I buy?

Only with valid prior express written consent for autodialed or prerecorded calls, after scrubbing against the Do Not Call registry, and never unsolicited for Medicare. The 2025 court ruling removed the one-to-one rule, not the consent requirement.

Sources

Checked on October 3, 2026. Rules and fees change, and many are set state by state or city by city: confirm the current requirements with the agency that issues them before you apply.

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