For entrepreneurs who want to create a small business that offers a steady stream of income over the next few years, an insurance agency is an ideal opportunity, as customers buy the products to ensure coverage continues. Among the types of insurance products an insurance company can sell are life insurance, annuities, long-term health products, automobiles, homeowners, property, causality, and disability.
Steps to start your own insurance company
Starting an insurance company can be a big and complicated endeavor and it takes years to obtain financing. However, this does not have to be the case for everyone. If you want to have your own insurance agency, start before and follow the necessary steps to get started.
Choose a specialization: Normally, insurance agencies are not limited to specific products and have a wide variety of insurance plans. However, it is possible to consider that you specialize in a particular product, while still offering other insurance plans. Most insurance agents sell various types of insurance including health, life, car, flood and homeowner’s insurance. If you plan to start your own insurance company, it is best that you specialize in all areas.
Become a licensed insurance agent: Laws and identifiers vary by state, but in general, you will require a property and insurance license and a variable Health and Annuity license. For example, in the state of Florida, these licenses are referred to as 440 and 220, respectively. Each can be obtained online or through an instruction in the classroom. Most community colleges also offer these courses. Before opting to sell insurance, you will need to go through several state exams. These assessments test your knowledge in various types of insurance and plans. Once you have passed these evaluations, you will receive the insurer’s license.
Work in an insurance agency: new agents are not eligible to have their own agency. You should gain around five years of experience. You can choose to work as an employee for an insurance firm or be an independent contractor for an insurance company. With this last option, you can work from your home and set your own schedule.
Get a corporate insurance license: Once you are eligible to start your own insurance company, you must obtain a corporate insurance license. This will enable you to sell insurance products under the name of your company.
Laws and identifiers vary by state, but in general, you will require a property and insurance license and a variable Health and Annuity license. For example, in the state of Florida, these licenses are referred to as 440 and 220, respectively. Each can be obtained online or through an instruction in the classroom. Most community colleges also offer these courses.
Determine which products are offered: Normally, insurance agencies are not limited to specific products and have a wide variety of insurance plans. However, it is possible to consider that you specialize in a particular product, while still offering other insurance plans. As an example, you may wish to focus on corporate health benefit plans and employee benefits to sell insurance to companies while continuing to offer variable life and annuity products.
Request a commercial loan: Unfortunately, starting an insurance company is not cheap. It can cost between 100,000 and 1,000,000 dollars. Make a list of all start-up costs, including but not limited to: office supplies, leases, personal expenses, such as salaries and benefits, and insurance, such as liability and insurance for errors and omissions. The use of these numbers requires an accountant or business planner to write a business plan to apply for a small business loan with the Small Business Administration database from an approved lender.
Buy a franchise or open your own agency: There are different ways to start your own insurance company. You can open a franchise and work as an independent agent for a known insurance company. The advantage of this is to operate under a well-established name and have access to “in-house” of funding by the matrix company. The advantage is the freedom to choose any product.
Search for a location: Once you have secured a commercial loan, it is time to look for the location of the premises. It is better to start with a small place. Choose a small location that has a large pedestrian traffic, and perhaps be within a lively mall or near a major intersection. The office space should have good exterior and interior maintenance and provide enough space for a reception area, one or two offices, and a conference room to hold initial client consultations and workshops for potential clients.
How to start an auto insurance company
Because you need to have car insurance in most places, and since it is increasingly common to drive a car, the demand for car insurance companies is also on the rise. If you can get investment capital and you seek to enter the business of making money by offering a service that meets a legal requirement of all the people who drive, then creating a car insurance company is for you.
Things you will need are property and accident insurance license, business plan, investment capital, property insurance and third-party damages.
Some steps you need to follow for learning how to start an insurance company for cars owners are the following:
Get a property and accident insurance license from your state: This license allows you to legally sell insurance for cars in the state in which you wish to operate your business and ensures that you have both the knowledge and the necessary skills to do so.
Create a business plan for your vehicle insurance company: Your business plan should detail how you will attract your customers, which insurance companies you will work with, and what your initial costs will be, as well as your expected income for the first years of the business.
Prepare yourself to offer your customers as much as possible: The more policies you have, you can offer more options for policies and different rates to your customers.
Consider buying an existing auto insurance agency: Buying a business gives you the advantages of saving time, buying a base of existing customers and avoiding the costs of opening a business.
You need to know the cost of creating an auto insurance company and make sure you get enough funds to manage your business.
Buy a business license and insure your company: In order to sell insurance, you need to register in the city where you want to provide your services.
Review and complete your business plan: Other aspects that your business plan needs are to identify your customers and the specific sales strategies that will attract them, hire qualified employees and identify the competition.
Market your car insurance company: You need to be able to identify and contact your potential customers. Advertising is necessary and it is worth contacting people you know. The keys to market your business are to identify your target market, take into account what makes your product unique and develop a strategy to communicate the reasons why people should buy insurance from your company.
Now that you know how to start an insurance company, it is time to invest in one of the best business in the United States and start earning money by working independently.