7 Steps for Your Own Insurance Company
If you plan to start your own insurance company, there are a few essential steps you need work out. These necessary steps will aid in obtaining the credentials and licenses for your insurance business. You have to follow these steps that are designed to give you a clear path in becoming an insurance industry practitioner and obtain success.
Regardless of your level of expertise or the prior knowledge you may have about the insurance business, it would be helpful to consider these steps as part of your successful business setup:
7 Effective Steps for Establishing Your Own Insurance Company
Step 1: Determine the type of insurance you want to offer
A lot of insurance companies specialize in particular types of policies or offer equally related types of insurance as well. Best example is a company selling both auto and home insurance. Another company would offer health and life insurance.
Step 2: Establish the legal entity of your business
You should decide what form of ownership you want for the company. You can choose from sole proprietorship, partnership, Limited Liability Company (LLC)
corporation, S corporation, non-profit or cooperative.
Step 3: Get the right licenses
Obtain an insurance license in the state in which you decide to conduct your business practice. This could be the crucial step when starting an your own insurance company. Keep in mind that license is a requirement in every state so that you can solicit and sell any insurance product. A license will help you to establish yourself and the company as insurance professional that can meet the needs of the clients with appropriate insurance products and services.
Step 4: Develop a comprehensive business plan and solid marketing strategy
A business plan will contain all information that will cover the details about your company’s location, facilities, potential market, marketing and advertising strategy, and human resources. Keep in mind that the details should be in accordance of legal restrictions and requirements in every section. The marketing strategy will comprise details on market research, company’s target market, the design of your insurance products, and a method for communicating your products’ distinctiveness and value.
Step 5: Secure your initial capital
Banks are one of the financial resources you can utilize for your own insurance company. A good business plan is essential in order to get approved for the financing. Remember that most states require an your own insurance company to establish and maintain a minimum capital surplus in the six and sometime seven figure range.
Step 6: Get a business loan and insurance
Business loans will cover the start-up costs such as office equipment, lease monies, employee expenses like wages and benefits, and insurance. The insurance of your own insurance company will comprise liability and errors and omission. Your accountant may help you in developing a business plan to get approved and secure financing.
Step 7: Choose the business location
Find a suitable office space that will accommodate all your company’s needs. It should have a well maintained exterior and interior. The office space must provide enough room for a reception area, one or two offices and a conference room for initial client consultations and workshops for potential clients.
About the author:
Candice Larson writes for Insurance Adviser from time to time. She juggles her time between advertising work and graduate studies. Candice is into travelling, blog hopping, and cinema