The idea of starting an insurance company is quite stimulating; the business is rather lucrative, and you will be making a difference in the lives of thousands of people as an insurance advisor. Because of uncertainties that life brings, every person today depends on insurance, and if you are an American citizen, you have to get an insurance coverage before you begin your career.
The market is promising and if you aren’t sure what the business entails and where to begin from, read on as we will tell you how to start an insurance company with simple tips and few essential things to consider that will determine your ability to start the business successfully.
The capital investment will depend upon the type of insurance company you are planning to open, your mode of operation, and the office location. You can start a simple insurance company with $10,000. However, if you are looking to open an expensive insurance firm with the best facilities and amenities, then you have to have a minimum of $1, 00,000 as an initial investment. While considering the start-up capital, you need to calculate expenses like rent, security deposit, office equipment, business licensing, agent license cost, insurance and legal permits, and agency management system.
You can either rent an office space, or buy a space or start your business from your home. Leasing or renting doesn’t entail any down payment, you will not be responsible for repairs and maintenance, and you can actually rent an office in an area that can improve your business visibility.
You can also buy an office space and make it your own. Having your own office will help you build equity, deduct interest payments, and earn a stable income by renting it out.
Or, you can build a home office and start right from your house and eliminate all of the above expenses.
You need to have a stable business plan, an existing book of business and submit previous loss ratios to establish a great relationship with insurance carriers. Once you become a renowned agency and become a part of an aggregator, you will have more access to insurance carriers. However, as a start-up, we suggest that you start with only one or two.
Either you can go for an existing book of business, brought from a former agency or you can build your own clientele from scratch. Look at various factors, such as the level of automation and documentation, history of the insurance agency, files sorting mechanism and the current market value of the book. Get legal advice from a lawyer before you buy the book of business.
If you join a cluster group, you will be able to meet the sale requirements easily. A cluster group is an association of several independent agents. In here, you will be working together to pool business to qualify for appointment by bigger insurance companies.
Joining a cluster has many advantages, such as increased negotiation commission rates, agency management software, an ability to quote specialty insurance, etc. However, you will have to pay an initiation fee to be a member of the association.
You can determine your profitability through your projected sales, gross profit estimate and your service charges. You have to take into account other miscellaneous expenses also. On average, you will make around $40,000 per year. However, the income of your firm will vary based on factors, such as your qualifications, state, region, experience, number of customers, and the insurance type.
If you want to get new customers quickly and easily, we suggest you ally with local real estate agents or offices. Alternatively, you can use the traditional word of mouth marketing philosophy to generate business rapidly.
You can also network with real estate businesses or other businesses to which you can sell your type of insurance. Online marketing is one of the trending and most profitable ways to see staggering growth in your business. The first step towards online marketing is building a website for your business. Create accounts on different social media platform and stay active on them by posting about your work regularly.
Give your company a professional appearance by designing and circulating brochures and business cards. Also, boost your brand image by using various promotional tools, like bloggers outreach, discounts, and other marketing strategies.
You need to be licensed in order to sell insurance. Your country and the state you live in, and your services offered will determine your insurance type. You may have to get multiple licenses and permits for the type of insurance you plan to sell.
Get in touch with your city’s or state’s insurance licensing board and find out what kind of obligations you have to meet. You may also have to take certain courses and training to become a certified insurance advisor.
If there is a licensing course, then we advise you to register for the state licensing exam to take them. They are the most reliable and authentic. Don’t go for any private examination center.
If you are looking for more tips about other start-up ventures, keep reading our blogs. If you want your questions answered, please post your thoughts on the comments.