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How to build an insurance company

how to build an insurance company

Things You'll Need


Determine a specialty to focus on. Although many large insurance companies offer a wide variety of insurance policies, a smaller company is generally better off specializing in a particular area at first and gradually expanding its product range.

Become a licensed insurance agent or broker in your specialty. Licensing will require you to pass several difficult examinations, for which you are likely to need to take classes. The nature of these exams vary from state to state.

Gain experience as an insurance broker or agent. It would probably be best to spend at least five years working for a small but reputable insurance company in order to learn how the small-scale insurance industry operates and to build up a loyal customer base.

Join a local insurance industry association and get to know other local insurance agents, particularly those in other specialties. Since it takes a lot of capital to start an insurance company, it would be best to pool the funds of a group of insurance agents before seeking additional financing for your insurance company.

Create a comprehensive written business plan. This document should cover location, facilities, potential market, marketing and advertising strategy, and human resources. Your business plan needs to take into account legal restrictions and requirements in every


Set up a corporation under the law of your state.

Create a written marketing strategy. This is will entail significant market research in order to identify your company's target market, to design insurance products that are distinct and tailor-made for this market and to develop a method for communicating your products' distinctiveness and value.

Conduct a complete cost analysis that takes into account your product offerings, anticipated payroll expenses and characteristics of your target market. Use this cost analysis to determine the initial pricing of your insurance policies. The end result should be a pricing structure that is marginally less expensive than equivalent products offered by competitors. Pricing is particularly critical in the insurance industry because of the intangible nature of the services provided.

Secure initial financing. Although banks are rather reluctant to finance start-ups, the Small Business Administration is a friendlier alternative. Otherwise, you might seek assistance from an "angel" investor (a wealthy individual). Note that a good business plan is essential in order to secure financing. Be aware that most states require an insurance company to establish and maintain a minimum capital surplus in the six and sometime seven figure range.

Invite your long-term customers to do business with your newly established insurance company as soon as their current policies expire.

Category: Insurance

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