How to Start an Insurance Company

How Can I Start My Own Insurance Company?

Insurance is a recession-proof business. Whatever the state of the economy is, people will still buy insurance. These insurance products are necessarily part of our modern life.

Vehicle, property, health, life, travel and credit insurance are the more popular types of insurance in the market today. So how exactly, do you start your own insurance business?

Here is What the Experts Say on How to Start an Insurance Company

Start-Up Costs

Wondering how can I start my own insurance company? Certainly, you need start-up capital. The amount that you will need ranges from $2,000-$5,000, depending on several factors like your location and how you plan to operate your business. Experts say that starting your agency as a home-based business can save you a lot of money.

You will be able to save on rent, extensive furnishings, signage and other expenses. Of course, you will need the services of a very good accountant and a very good attorney to help you set up your business properly.

Finding Insurance Clients

The biggest challenge that independent insurance agents face is how to find clients. Experts say that one of the ways to keep ground running for you is to buy a book of business from an independent insurance agent.

A book of business from these agents will give you a listing of their clients and their associated policies. When you buy this book, the selling agent actually transfers his or her status as the agent of record for the account to you.

This means that when clients have questions regarding their insurance policies, they will call you and you will be responsible to service their accounts, even though you have yet to earn commissions from them. You are actually providing them service for free.

However, you will gain advantage later by getting their renewals, associated commissions and their referrals. If you are wondering “how can I start my own insurance agency?” buying a book of business is a vital first step.

Social Media Marketing and Networking

Experts also recommend the use of social media marketing and networking. Facebook is everywhere!

One insurance business was able to get calls from prospective clients a few months after creating the company’s own Facebook page. The owner even said that he was writing more business from social media efforts within a short span of time than from all other marketing efforts he employed, such as Internet leads and direct mail.

Social media allows you to build your own referral network. On the average, the leads you will get from social media close 30 to 40 percent of the time. This is because social media allows you to connect directly with the right people, the people who want to do business with you.

Referral Partners

One of the answers to the question how can I start my own insurance company is referrals—experts also recommend the use of referral partners. One agent said realtors, especially mortgage loan officers, can be very good referral partners.

Some of the most successful insurance agents get a majority of their business from mortgage companies. These loan officers are certainly your best friends. These officers need to have homeowner’s insurance in place before they can close loans.

However, as they say, these loan officers are not so easy to get business from. They are skeptical by nature and are very much creatures of habit.

Remember, the law of reciprocity is one of the strongest principles behind lead generation there is.  If you do something for them and ask a favor in return, after you’ve done it, they will feel more compelled to grant your favor.

So you can give them exactly what they want and when they want it, but at the same time, earn yourself new clients for your insurance business. If you are able to do this well, referral partners can send you two, three, four or five referrals a month.

Telemarketing

Another method to answer the question how do I start my own insurance company is telemarketing. Rather than hiring a telemarketing service, you can employ local college students or people who want to work part time to make calls directly on your behalf in the evenings, while respecting the National Do Not Call List.

This then can be combined with your use of individualized hand written, hand stamped notes. These two are complementary and are proven to be extremely effective, compared to dumping thousands of direct mail pieces a month at the post office.

In summary, an expert says profitability in the insurance business results from the interplay of two factors— visibility and credibility. If you are wondering how can I start my own insurance company? know that you have to build your visibility first.

Make yourself known to your target market.  Grow your network. Then you can build your credibility by establishing a good name by being a good resource in your immediate community. In this way, you will surely start getting referrals and quote requests from prospective clients.

Are you thinking how can I start my own insurance company? Join ASNOA and receive direct carrier access,  administrative support and on-going training.

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