How do you start an insurance agency? Whether it’s home insurance, health insurance or pet insurance, the majority of Americans prefer (or are at least required!) to be insured. This means insurance companies have a massive pool of possible buyers. In major lines alone, 92.1% of the US population has health insurance, 52% have life insurance, and 87.4% of US motorists are insured. 

Insurance agencies are the companies (or individuals) authorized by an insurer to sell the insurer’s products. They are the ‘front lines’ of the insurance industry and the point of contact for individuals and business owners who want to get insured. Insurance brokers perform a similar role, although they typically work with a variety of different insurance providers. Insurance agencies usually only work with one.

So how can you start an insurance agency of your own? It starts with creating a plan for the customer you want to attract, the services you’d like to offer, and the strengths and interests you bring to the table.

Who should start an insurance company?

If you’re interested in becoming an insurance agent and starting your own organization, you’ll need to have the necessary training and expertise. In the US, becoming an insurance agent or broker means you’ll need to take the required licensing exams and comply with the rules of your state. These include:

• Being at least 18 years of age, in most states
• Completing a background check, you’ll need to prove you’re free from fraud or felony charges
• Being free from outstanding government debt, including income taxes or child support

If you’re setting up your own business, you’ll also need to decide on the best corporate structure and legally set up shop. 

To decide on the kind of agency or brokerage you’d like to run, you’ll need to assess your interests and skills. For example, if you enjoy customer service or networking with insurance agents or representatives, you may benefit from starting an insurance brokerage in a certain area, like small business insurance or non profit. If you enjoy running your own business and want to offer specific insurance products through a pre-existing brand, you might find it easier to start an agency and sell products from a provider. 

Both of these routes are easier with insurance industry experience. Working as a broker or a customer service agent in an existing agency can help you understand the business and see which areas you’d like to pursue. 

It’s also important to note that while a degree isn’t an official requirement, having one isn’t a bad idea. Whether you’re a broker or insurance agent, you’ll need to handle registration and licensing, administration, customer service, and HR in order to run your firm. 

Understanding insurance products (and running a small business in general!) is easier when you already have the knowledge foundation. According to Deloitte, the most common concern faced by small business owners is marketing, followed by cash flow. Here, a college degree in an area such as finance, business administration, or marketing can not only help you better understand the insurance products you sell, it can also help you with the operational side of the business. Some schools also offer risk management courses and specializations to get you ready for the insurance world from the get go. 

How do you start an insurance agency?

What kind of business do you want to run? Creating a business plan doesn’t need to be formal, although the more detail you have at the outset will help you as your operations grow. Having a business plan can also help you when seeking funding for your new operation. Creating one can also give you a better idea of the expected costs that come with running a business. There are plenty of free business budgeting templates available on the internet. Using a simple one should get you started.

In addition to the budget, the business plan should provide a ‘road map’ for your business plan and where you’d like to go. It should also address how you can make money, and what you’ll do with the money (for example, reinvesting it in your business to buy office space). Your insurance agency business plan can include questions like:

• Who are your customers? What services are they getting now? Where are they unsatisfied? Why should they come to your business over anyone else? 
• Who is offering similar services? What is the size of your target market? Are they willing or able to switch? 
• What are your profit margins? Where will you invest profits? Where do you want to be in 5 years, and what will you need to do to get there?
• What are the costs? How will you fund your endeavor? Will you rent office space or hire staff? How will you afford payroll? Website design? Marketing? 
• What kind of employees do you want to hire? What kind of company atmosphere/vision/mission do you want to create? 
• What are the challenges your business might face? 

Once you’re familiar with your business plan, it’s always a good idea to get some exposure to the industry by networking with other claims professionals. Professional associations in the claims space offer great insights into the industry, as well as the professional networking opportunities you’ll need to get started. 

Finally, take it slow. Insurance is one of the most highly-regulated industries in the United States, and not somewhere you want to cut corners. While it can take some time to get set up, many claims professionals find insurance a satisfying and interesting career. If you’re interested in working in the claims space, the challenges and rewards of insurance business ownership might be right up your alley!