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How to start an insurance agency

 
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Category : > New Business Setup
Posted On : Thu Dec 08th,2016

 
A complete guide to open an insurance company in the USA
 

Why start an insurance agency?

Insurance products have become the most important part of the life. No one wants to leave his investment unprotected. From auto insurance to life insurance, every part of life is protected by insurance.
 

Industry Overview

In the insurance industry, companies act as an agent to sell insurance annuities and policies. The global insurance industry produces $5 trillion premium each year. Causalities, property, and health sector are being seen the strongest sectors in the recent years. The USA brokerages and insurance agencies have almost 133,000 establishments with the annual revenue of $ 120 billion.

  • Companies that offer various insurance products to a business function as brokers
  • Captive agencies work as sales agent for single insurer
  • Independent brokers offer insurance products from several providers

All the socioeconomic groups across the USA get the services of insurance agencies. Consequently, revenue and industry establishments are organized in line with regional population. Multiple people use the products of insurance agencies firms nearest to them.
 

List of Niche in the Insurance Agency Industry

There are basic four components to discover a niche market: opportunities, market, ability, and passion. You may start an insurance company such as:

  • Insurance program for individuals
  • Insurance program for airlines
  • Insurance program for farmers
  • Business insurance
  • Health insurance
  • Causality insurance
  • Life insurance
  • Property insurance
  • Inland marine insurance

 

What is the level of competition in the insurance industry?

The USA insurance industry remains highly fragmented despite the prominent large companies’ commercial segment. The well-known brands in the insurance agency business are:

  • American International Group
  • American family insurance
  • American income life insurance company
  • Assurant
  • Arbella insurance group
  • Commerce insurance group
  • Combined insurance
  • Country financial
  • Conseco
  • Elephant.com
  • Omega
  • Manhattan Life Insurance
     

The Economic analysis of insurance industry

The insurance agencies and brokers have experienced the subdued growth over the five years due to delayed purchases of homes and tempered disposable income levels and consumer durables. In coming five years the improvements in homeownership rates, employment levels, and car sales are anticipated to drive revenue. The unemployment rate is expected to decrease and increasing demand in property and causality insurance is also being expected. 


Is an Insurance company Worth Starting as Scratch or purchasing a Franchise Better?

Owning a franchise allows you to get into the business through a proven business model with a built-in customer base. Though you are the owner of the franchise but it does not give you total business independence and it demands a significant capital investment to start your insurance company franchise.

A franchiser owner may receive help with:

  • Construction and design of physical facilities
  • Site selection for optimal traffic
  • Training to learn proven operational methods
  • Regional and national advertisement
  • Access to bulk purchasing agreements

What are the Possible threats and Challenges of Starting an Insurance Agency?

Selling insurance products are important but it is also a challenging work. The initial challenges to open an insurance agency may include:

  • The economy
  • Industry legislation
  • Start-up costs
  • Health care reforms
  • Getting licensed

What are the various legal business entities to register an insurance agency?

Mostly the legal structure of the business based on the scale and size of the business. the various legal structures are:

  • Corporations
  • Limited Liability Companies
  • Sole Proprietorship
  • Partnership/ General Partner ship/Limited Partnerships
  • Professional Entities

Note: Some states are required you to get an approval from the concerned departmets to incorporate an insurance company. Such as, if you are starting an insurance company in New York , you must get an approval.

What is the best type of insurance for an insurance agency?

In order to sell insurance products, you are required E&O insurance and Business owner policy (BOP). E&O is sometimes called professional liability insurance and it stands for omissions and errors. It gives you protection if you forget to advise something to your client.

 

How to protect your insurance agency intellectual property?

Professional insurance agencies- small or big are obliged to secure the customer’s personal information from merging to acquisition the entire process remains secure.

To protect your insurance agency from mishandling of clients’ confidential information, mitigation, risk management is essential; you are required to do the following steps:

  • Non-disclosure agreements and legal contracts
  • Hire professional and loyal staff
  • Ensure trade secrets (via internet or internet server) are secured adequately
  • Consult a legal professional to ensure your legal basis are covered

List of Legal Documentation Needed to Start an Insurance company

  • Client agreement
  • Insurance
  • Business license
  • Employment agreement
  • Tax
  • Non-disclosure agreement
  • Online terms of use

If you hire support or office staff you may need to carry workers’ compensation insurance depending on the state and number of employees.

A business license may require registering an insurance company

  

Khizar Hayat

The Author of this article is a M.Phil in English Literature


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Comments (1)
satbir singh   wrote on : Fri Dec 16th,2016
.AARTI INTERNATIONAL PACKERS AND MOVERS M.9316809903.,9041064455      View Detail
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