Insurance is an attractive niche for many entrepreneurs because it offers substantial potential for profits. Opening an insurance company is a long and expensive process, but it can be a good way to build a business that will last for generations. Because starting an insurance company requires a precise and methodical approach, careful planning is critical to the success of this venture.
Check with your state's insurance department to find required forms, exhibits and other information required for licensure. Although the National Association of Insurance Commissioners (NAIC) has taken many measures to encourage uniform licensing processes, application procedures vary significantly by state.
Determine your target niche market. For example, if you are opening an automobile insurance company, decide if you want to attract young drivers, senior citizens, high-risk drivers or another type of customer. Knowing your target niche will help you more effectively attract customers to build your insurance business.
Choose company officers who have strong backgrounds in insurance operations. State insurance departments typically require new companies to demonstrate that their key management personnel can successfully operate an insurance company.
Decide what types of insurance you want to provide. Separate licenses are required for different types of insurance---an insurer licensed only to write automobile insurance, for example, cannot sell life insurance products. If you want to sell multiple types of insurance, you will need to obtain multiple company licenses.
Develop a marketing strategy for your business. In most cases, you will provide the insurance department with a detailed description of the advertising methods you will use to attract customers. Some states, such as Texas, must approve print, radio and television advertising.
Deposit any necessary paid-in capital with the financial institution designated by your state's insurance department. This amount can range from $1 million to $5 million. You will also need to demonstrate to the insurance department that your company has sufficient financial reserves to pay for insurance claims while your company is growing.
评论