Did you know that more than 600,000 new businesses get started in the US each year? The only problem with this statistic is the one that normally follows it; most new businesses fail within the first five years.
Are you hoping to start a business that lasts? One of the most important things you can do is choose an industry that will always be in high demand. That’s why many smart entrepreneurs are keen on starting an insurance agency.
Wondering how to start an insurance company? It’s not as difficult as starting many other types of businesses.
Keep reading below to learn all about building an insurance agency of your own.
How Hard Is it to Start an Insurance Company?
One of the biggest benefits of starting an insurance company is the potential lack of overhead. While many agencies have traditionally utilized public office space, the trend for insurance companies going forward is remote work.
This is especially true for smaller, independent insurance agencies as opposed to large corporations.
So you won’t need to raise large amounts of capital, take out loans, sign a commercial lease, and all that jazz. Oftentimes, you can start as an independent insurance agent on your own, and grow over time as you build up your client base and reputation.
In that sense, starting this type of business is much easier than many other businesses that require excess capital.
How to Start an Insurance Company
The first step you need to take when starting an insurance company is becoming a licensed insurance agent if you aren’t one already. The good news is that becoming an agent doesn’t require a college education, though having a degree in business, finance, or marketing will help you run your company.
First, define what type of licensed agent you want to become. Most states shave different licenses depending on the plans you want to sell.
Then, follow the steps to obtain your license in your state. You’ll need to take a pre-licensing class, which may require up to 40 hours of learning time, either online or in person.
Then, you’ll need to pass the state exam. Upon passing the exam, you’ll submit your license application, along with a background check. With the state’s approval, you’ll get your license.
Before starting your own agency, it’s extremely helpful to take a job at an existing agency. Here, you can get paid to learn the ins and outs of the insurance industry. You’ll be able to answer many basic questions, like “what is an FMO?”.
And you’ll learn what you like and don’t like about existing insurance agencies so that you can create your own niche in the market.
The Logistics of Starting an Insurance Company
Once you’re a licensed agent, you’ll need to do all of the things that every business has to do. You’ll need to register your business with the state and apply for a tax ID number, so you can pay your taxes.
You’ll want an insurance policy for yourself. You’ll need to set up a legal structure, such as an LLC. And you’ll need to build a website, design business cards, and begin marketing your new company.
How much does it cost to start an insurance company? It’s possible to get started for less than $10K if you need to.
Get Started Today
Now that you know how to start an insurance company, it’s time to get the first step. If you need your agents’ license, then register for a pre-licensing class today.
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