Are you interested in starting an insurance company? Do you need a sample insurance company business plan template? Do you want to know what it takes to open an insurance agency? So I advise you to read.
Insurance is a mechanism used to spread the financial losses that a person or their family may suffer if a particular event occurs. The event can be the death of a family member earning life insurance, marine risks in marine insurance, fire in fire insurance and other specific events in other insurance, for example. theft under burglary insurance, accident insurance, etc.
The losses resulting from these events are distributed among all the insured in the form of a premium. Therefore, the risk is passed from one person to the group. Therefore, in this article I will tell you in detail how to start your own insurance company or agency.
Creating an Insurance Company – Example of a Business Plan Template
1. Obtain a license
To start an insurance company, you must first obtain a license. This means that you will become an insurance agent. To start your own independent insurance company, you must have the legal right to sell financial services and insurance to the general public under your registered company name.
According to the law of your state ( United States ), you must have at least a minimum capital of $ 1,000,000 to $ 5,000,000 to start playing. The above money goes to the infrastructure, advertising, personnel, marketing, and other costs needed to start your insurance business. However, this does not include the minimum deposit or capital base that you will need to get started.
In Nigeria, you will need the approval of the Central Bank of Nigeria ( CBN ) and a Nigerian. Insurance Commission (NAICOM) before you can set up an insurance company. You may also need the minimum capital required to open an insurance agency. However, just make sure you go to the right licensing agency and get the correct information you need to start your business.
You also need a letter of credit from a bank or assets for the amount you need to purchase an insurance company license from a government licensing office. This helps to ensure that if you do not pay the premiums, your customers can still be compensated according to state law.
Since insurance is a service, people are constantly looking for various events in their life, with a little bit of risk and training, you can build a profitable business that also provides excellent service to customers.
2. Determine the type of insurance coverage you want to offer
After deciding to start an insurance company, you need to know what kind of insurance service you want to offer your potential clients. Insurance can be divided into three main categories:
- Assets and income
- A responsability
Some of these types of insurance are:
- Life insurance
- Fire insurance
- Marine insurance
- Social assurance
- Miscellaneous insurance
- Personal insurance
- General insurance
- Home Insurance
- Liability insurance
- Loyalty insurance
3. Contact the insurers
After choosing the type of insurance services you want to offer, you will need to contact licensed insurers and ask them for information on how to become their representative.
You need to make sure you shop with multiple underwriters and find the one that works best for your business idea. Also consider your location and your surroundings when choosing the type of insurance you want to offer. It is advisable to tailor your products to your potential customers.
4. Write a business plan for the proposed insurance company
When writing a business plan for an insurance company, you should hire a professional to write it, especially since you will have to submit it to the bank and the government regulatory commission, especially if you are looking for a business start-up loan.
Determine if you want the company to work in partnership. or company. Each type of business has its own advantages and disadvantages. Find the one that’s right for you. It also affects the type of work license you would get.
Agency licenses are granted to corporations, limited liability companies (LLCs) and partnerships. Individual entrepreneurs often receive individual licenses. You need to make sure that whatever license you hold, you are dealing with; failure to comply with this requirement will be justified by law.
Here are some basic terms used in the insurance industry that you should know:
- Agent: Someone who represents an insurance company and sells its insurance products. In some cases, the life insurance agent may represent several different insurance companies. Agents must generally be licensed in the province or territory in which they do business.
- Claim: Legal advice that you give to your insurer to pay you compensation for damage or an event covered by your insurance policy.
- Complaint investigation: Process used by insurers to obtain information about a claim, which is necessary in deciding whether to pay a claim.
- Coating: the amount of coverage you purchased. The maximum amount the insurance company will pay you if you make a claim for a loss or event covered by your policy.
- Franchise: The amount on your statement that you agree to pay before the insurer pays the balance. By choosing a higher deductible, you will lower the cost of your premiums because you are prepared to pay most of your losses. This term can be used with medical, dental, home and auto insurance policies.
- Insured: person (persons) protected by an insurance policy.
- Insurer: the insurance company issuing the insurance policy ( in this case it will be your business ).
5. Rent office space.
Your office should be located in a professional and well-maintained location. Inside the office there should be neat rooms with private offices, a conference room and a reception.
Most insurance offices are often located in business districts that customers can easily find. The insurance industry is sometimes all about looks and impressions. Your appearance makes customers stay and do business. No one wants to buy insurance from a black man in a dirty office.
6. Advertising and marketing
Insurance is a service like any other service, so it must be marketed properly to increase sales and profits. Most people buy their insurance from insurance agents, insurance brokers, or the insurance company itself. Most insurance companies sell their services through networking, email marketing, print media, direct mail, and direct phone calls.
Have you considered starting an insurance company? Or looking for a way to invest in an insurance company? So consider these tips and take action. You won’t know it works if you don’t try it.