How to make a business plan for an insurance company? If you are about to launch an insurance company, now is the time to find out how to make an insurer’s business model. Nowadays it doesn´t matter what niche a company is in since all of them can put together their business plan from a template that may change according to the goals of every one of them.
But before starting with the entire business plan process, it will be essential that you acquire an insurance license that regulates the insurance industry in the country where you are located. You can find information on how to get this license online.
In this post, we want to focus on how to develop a business plan for your insurance company, and we will do it step by step.
Business plan: What does it take to open an insurance agency?
An insurance company must be 100% ready to face any challenge that may arise. Therefore, a business plan will be the most practical option to be able to fulfill the company´s goals and the established financial requirements.
This would be the template you should follow if you want an effective insurance company strategic plan:
Consider the industry´s overview
The insurance area turns out to be very wide. So, to start in this market, you need to be aware of several things. Likewise, to start with an insurance company you must determine in which area you´ll specialize, although you could also start with an insurance company in general.
There are insurance companies that sell policies that cover life, liability, cars, and much more.
Make an executive summary
The executive summary should state what you are looking for when you have an insurance company today, and what you expect from it in the future. It should also show what your approach is when working in the insurance sector. For example, the strategic end of an insurance company must be clear to position itself and in turn offer a diverse range of products for the target audience.
So, if you have this same mindset, we are on the right track. Anyway, in this executive summary, it is necessary to make clear what standards will be held to meet the customer’s needs.
Show products and services
It´s important to highlight what services you can offer as an insurance company. In this way, you can profit in the market that is taken by this sector, and in turn, you will be able to achieve your purposes and business goals.
Your products of offers and services could be formed from the following examples:
- Health insurance policy.
- Life insurance policy.
- Auto insurance policy.
- Pet insurance policy.
- Aviation insurance policy.
- Agricultural insurance policy.
- Property and casualty insurance policy.
- Inland marine insurance.
- Advisory services regarding insurance plans.
Set the vision and mission of the company
What is the vision of your insurance company? This point is usually important for any business plan. In the case of an insurance company, the idea is to offer a wide variety of products and services at an affordable price. Another important point within the mission will be to be one of the main insurance companies in your country.
These are very clear ideas that have worked for the most prestigious insurance companies today. Similarly, both the vision and mission of your company depend on the established goals.
Show your commercial structure
The consolidation of the vision and mission will depend mostly on the business structure of the insurance company. When you have a strong structure in place, it can add significant growth to your business.
Then again, to become a leading brand in the insurance market, the most appropriate thing is to have a commercial structure such as the one mentioned below so that each one fulfills an optimal function:
- Executive Director.
- Legal secretary.
- Head of claims.
- Head of collections.
- Human resources administrator or manager.
- Marketing executive.
- Customer service staff.
- Reception officer.
Carry out the SWOT analysis
For the SWOT analysis to be efficient there will be nothing better than having a professional in the area of business plan consulting. In this way, they will be able to help build an insurance company that has a good structure to compete with the rivalry found in this industry.
These are the elements that make up the SWOT analysis:
- Strength An insurance company must have team power as a central force since they must have the ability to meet the needs of their clients to add value to their money. When a business is well-positioned it can easily attract a greater number of customers. The insurance service should not be interrupted for it to be of quality, which is why today many companies have a fully customized software application so that communication with the client is continuous.
- Soft spot Every business can have certain weaknesses, but the most important thing is knowing how to recognize them. In general, one of the biggest weaknesses for a company of this type could be the time spent gaining popularity in the insurance market.
- Opportunities In the insurance industry, there are many opportunities, it´s important to be prepared to take advantage of them by offering various insurance packages and policies.
- Threat When an economy is weak there can be many limitations to the insurance sector. When investing in a certain business, certain risks are being taken, and that is why risk assessments must be carried out within the business plan to create strategies that allow staying afloat in this highly competitive industry.
Do a market analysis
In the market analysis, several elements that will be a great determinant for the success of your insurance company must be considered:
In the insurance industry, the smallest insurers are known as single corporations. On the other hand, there are the leading insurance companies that exist as insurance groups, and they are generally associated with so-called “portfolio associations”.
This type of practice has many benefits since, depending on the inconveniences that may arise in the insurance sector, the survival chance of the smaller insurance companies is usually very low. Consequently, it is very rare these days to get an insurer that does not have multiple insurance coverages for sale.
The regular payment of premiums is another of the most visible characteristics for the survival of this type of business, so they must implement systems that allow the collection of premiums to the holders easily. If you have looked at the particularities of the most successful insurance companies, you will surely notice that they take much advantage of the tools offered by the internet.
Usually, the target market is the one around the city where we started with an insurance company. However, this will not be an impediment for it to continue its growth and to be able to compete with the leading companies today.
Depending on the goals of having a company dedicated to this sector in the future, it can acquire more companies to expand the sales of its products. By adding a wide variety of products and services, your target market can be expanded significantly.
Your target market can encompass the following groups of people or organizations:
- Young adults.
- Companies and entrepreneurs.
- Corporate organizations.
- First-class companies.
- Manufacturers and distributors.
- Sports organizations.
- Real estate owners.
- Research companies.
During the last decades the insurance industry has become more competitive, and to survive in it it is key to be creative and focus completely on the needs of each client.
In this way, you can be ready to compete with other insurance companies regardless of whether they are small or leaders.
It does not matter if you are a beginner in this industry, if you have a highly professional team with insurance licenses and are highly qualified, this will be a great competitive advantage.
Develop a sales and marketing strategy
No matter what sector a company operates in, the fact is that all must be involved with marketing. Especially insurance companies, because they require aggressive commercialization, and to achieve this, marketing will be your best ally.
Insurance companies must be ready to spend a significant amount of money on marketing, and in the marketing department for a good promotion of their products. Just the same through advertising, they must offer innovation to attract the attention of the target audience.
The marketing plan of an insurance company must be based on reliability, and for this, it will be necessary to have a team that can connect with its clients positively so as not to hinder their growth in this industry.
To market your products and services taking into account marketing strategies, these will be some of the most useful platforms:
- Presentation Letters.
- Advertising the business in trade magazines.
- Make use of local directories for your company’s listing.
- Attend seminars and exhibitions for the sale of your insurance policies and establish better contacts.
- Make leverage online to promote your insurance company.
- Hire the services of marketing experts to improve the marketing of your products and services.
Have a sales forecast
Ideally, you can achieve a good position in the insurance industry, and for this, you should do a good analysis of the insurance market to know what its possibilities or limitations may be within the sector.
That is why to make the sales plan of an insurance company you must have in mind the information collected from the analyzes that you have already done previously. In the same way, your sales projection must be in accordance with the location of your company, with the products and services it offers, and with what you want to obtain in the middle of this industry.
To do this, you must keep track of your sales projection for the first year, second year, third year, and so on.
Within the insurance sales plan forecast, you must also think of two very important elements:
There is an established trend in setting prices in the insurance industry, and in many cases, it can be determined by the risk involved in insurance policies.
In general, this math is made by experts in the insurance industry and although there are price standards related to coverage.
One of the best options to enter the market is to sell your products a little below the average price that we find in the industry.
What payment options are you including? Right now, it is practically necessary to have several payment options, since each client should have the opportunity to have the payment option that best suits them so that the sale of an insurance policy is an easy and satisfactory process.
These are some of the payment options that can be made available to the client:
- Bank transfers.
- Online bank transfers.
- Bank drafts.
- Mobile money platforms.
Make projections regarding the financial part and costs
Starting an insurance company requires a lot of expenses, and here are some of the factors where most of your capital will go:
- Total fee for the incorporation of the business.
- Budget for insurance policies (permits, licenses, …).
- Cost of office equipment (computers, furniture, printers, security devices, fax machines, much more).
- Website launch cost.
- Budget to hire a specified number of employees.
- Everything related to the installation of the office or its reconstruction.
- Capital base.
- Additional expenses (cards, promotions, signage, advertisements, etc.).
Develop a sustainability and expansion strategy
When companies have a constant flow of business they can easily survive. At the same time, some clients promote their products and services, and to face this, if you have an insurance company you must have a wide number of products and services to meet the needs of large and small clients, as well as those of individual and corporate clients.
The idea is that you can keep the constant sale of your insurance policies to generate constant income for the organization. That is why the sustainability and expansion strategy must focus on hiring competent employees, maintaining a pleasant work environment, and providing benefits to all staff.
Regarding expansion within the business plan, the goal may be to merge with other companies or acquire another company that allows you to have more market share.
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A business plan is more important than you can imagine because it is the only way you can maintain an established marketing strategy and more assertive projections.
At BluCactus Ontario we have a team of certified professionals, and we can help you create the business plan your insurance company needs.
Contact Us! And we will gladly assist you.