If you are planning to start an Insurance Company of your own, you have a lot of work ahead. Insurance Company is like putting up any other business. However, Insurance companies are quite an entrepreneurial venture.
Why an Insurance Company?
Does anybody buy anything without an insurance these days? The answer is no. All the people today want their investments to be protected and safe. From buying a car to insuring our own lives undoubtedly insurance companies are on the priority list of each buyer.
Types of Insurance
- Health Insurance
- Auto Insurance
- Life Insurance
- Liability Insurance
- Disability Insurance
- Land Insurance
Along with this, there are many other types of insurances that the each one buys before each big investment.
How and why are insurance companies challenging?
Unlike salesperson and brokers, insurance companies work on commission-only basis. Either you become that person for the company or hire someone who can do it for the company.
Without a doubt, it is utterly difficult for someone to make cold calls all throughout the week to make a trustworthy reputation for the company.
Making sales of insurance is totally another task at hand every day. You should be able convince people that they need your insurance while sitting in their own house. Even so, when you know that you supposed to make profit out of that very sale.
You should know the market well and cater to the gaps that exist. Definitely there are many points that the prevailing insurance companies fail to fulfill for their customers.
If you are ready for all these challenges every day in and out than check this quick guide to start an insurance company.
Planning your business
Preparing an impeccable business plan is always necessary so that your business always remains on track.
- Study and analyze the market
- Understand your target audience
- Select your potential investors or stakeholders
- Be ready with tactics and strategies to attract customers
- Explain why will people choose your insurance deal and not others
- Keep in track with the risks involved
- Fix a starting budget and make flow chart about how the money will be used
The blueprint of the company is absolutely important to attract investors and potential employees who are willing to work with your company.
There are a few structures that are allowed to be followed in an insurance agency. The study and analysis of each is very essential. Furthermore, you can decide what suits you the best. Some insurance companies have Sole Proprietorship structure, whereas as some Partnership between two parties. Corporation and S Corporation are also legally accepted insurance company structures.
These are the different structures you can use to start an insurance company. Although each structure has many perks as well as dangers.
Registration of the Agency
Select a name that is easy to remember but also an unique one. Once you and your colleagues (if any) settle on a certain name, you have to get it registered with your state.
You have to contact the state insurance commissioner’s office. The officers will check and verify your business and then register your company as “resident business entity”. Finally, you have start paying the state and local taxes when you kick off your business.
Tax ID Number
All the business should have their Tax ID number. This gives the company an unique identification. Moreover, this identification is used in future for all the tax payments and various such transactions.
Various Licenses and Permits
When you start an insurance company there are a few licenses and permits that need to be taken care of. Nevertheless, if any of these permits are not cleared you will face severe legal problems in future. For example,
- Basic Business Operation License
- Zoning and Land Use permits
- Licenses of Sales Tax
- State Special-Issued Professional License
And a few more business licenses and permissions that are necessary to start a business in almost any part of the country.
Managing your Insurance Company
You will/should hire an agency that will take care of the management and operations of the company on day-to-day basis. Clearly, this is important because the seniors will be busy expanding the business meanwhile these agencies will back the ongoing businesses.
Last but not the least, you have to start reaching out with your business to potential customers and also businesses that might want to invest in the growth of your company.
Take care that each of the legal permits are verified to avoid any legal action that can hamper your business in future.
When all of these steps are done, you are all set to bring your insurance company in the market.
This is the summary of the guidelines which will help you plan and execute your idea to start your insurance company.
- Draft a good plan to get this business going. This is very important to get started
- Make it better than the existing ones so that people can differentiate between you and the other companies
- Educate yourself the competitors in the business and your vicinity
- Study and wisely choose a structure that suits your idea and also is legally allowed
- Choose a unique name and register your agency’s name
- Registration of your insurance company with the state. This is the legal verification of every insurance company.
- Get an Tax ID number
- Furthermore, there are necessary business licenses and permissions required
- Hire eligible employees/agencies
- Start promoting
Great! You have reached the end of the article. I hope this steps help you start an insurance company of your own.
Best of luck!