How to Start an Insurance Agency Business from Scratch: Cost and Steps

Insurance is something everyone needs; whether it is car insurance, health insurance, renter’s insurance, home insurance or life insurance.  Getting into the insurance selling business may be easy, but being able to remain competitive and find clients will be the largest and most difficult challenge.  The insurance business is very competitive and laws and regulations are always changing.  If you are planning on starting an insurance agency, you will need to have a sound business plan, knowledge of the different types of insurance, and an excellent marketing strategy to be able to compete and succeed in the industry.

Insurance Agency Plan

  • The business plan is essential to the growth and success of your business.  It is also necessary if you are planning on applying for financial backing to startup your business.
  • Financial records, for at least the last five years, will be necessary in the business plan.  Include tax return records, bank statement, loans (outstanding as well as paid off) and any other financial obligations, assets and liabilities you may have.  Potential investors will most likely also like to see a compilation of the names and contact information of all financial institutions that hold or held any of your accounts.
  • The business plan should include an estimated profits and costs detailed list for at least five years.  Some investors may want to see a longer projection for up to fifteen years of what you estimate your costs and profits may be within that time frame.
  • The marketing plan will help investors see your dedication and determination to advertise your business and gain clients.  It will also help you to plan and follow your goals as well as updating them as needed.

Steps to Start an Independent Insurance Agency Business

  • Renting or leasing office space can be very expensive.  If you do not have enough financial backing to lease office space, working for home would be a good idea.  You can still start and run a successful insurance business out of your own home and it will help to save a lot of overhead costs.
  • Decide upon the type of insurance you want to offer your clients.  Research the area to see what types of insurance are most needed in your locality.  Unless you have a lot of financial backing as well as a lot of customers already under your belt, it is best to start off with only one type of insurance.  You can always add different types of insurance policies as you grow your business.
  • Be sure to get all of the necessary licensing and permits from your local city hall and licensing agencies.
  • Selling insurance requires taking and passing written exams.  You will need to take and pass an exam for each type of insurance you are planning on offering.  Keep in mind that you will also need to continually keep up on these exams as they are required to be updated every couple of years.
  • Start networking with other insurance agents in the area.  This will give you the opportunity to learn some more tricks of the trade and you build your own business.

How Much Does It Cost To Start Your Own Insurance Agency

  • Well, cost and starting investment all depends on the size and place of your business.
  • Buy you can always start this business with low investment.
  • It also depends on kind of products you are going to offer.
  • Agency license will cost anywhere between $150 and $400.
  • E&O insurance will be nearly $1200
  • Other expenses are
    • Office equipment and stationary.
    • Business cards.
    • Advertising and marketing.
    • Call center.

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