Starting an Insurance Business From the Ground Up

Starting an insurance business from scratch can be a big undertaking, but if you can set a good framework, you can increase your likelihood of success. While it can take some time, money, and perseverance to start an insurance business, it may be more attainable than you think.

Assuming you’ve already figured out the type of insurance business you want to run and are following the requirements of your local jurisdiction, like for licensing, you’ll need to focus on the operational and go-to-market aspects of a successful launch. Breaking these areas down into bite-size processes and goals can make starting an insurance business much easier.

In this article, we’ll dive into what it takes to start an insurance business as an independent commercial insurance agent from these operational and strategic standpoints. That said, those interested in running other types of insurance businesses might still benefit from some of the key points discussed in this article.

If you want to distribute your commercial insurance products digitally we can help. Click the button below to learn more. 

Develop Your Business Strategy 

Before you get too far into the weeds of starting an insurance business, it helps to develop an overarching strategy that you can use as your guide. This doesn’t necessarily have to be a formal business plan, but you might want to write down primary ideas that you can refer back to. 

To develop a business strategy for your startup insurance business, focus on areas like:

Figure Out What You’ll Sell

You’re selling insurance, but do you have a more specific plan than that? If you’re too broad or unclear, your sales approach might not land well with customers. So, think about whether you’ll sell all types of commercial insurance or if you’ll specialize in certain types of policies, like workers’ comp coverage.

If you do want to go broad, that can still work, but you might have to market yourself as more of a generalist. Let potential clients know that you can help in multiple areas and that you can assist them as their business grows and changes.

If you take a narrower approach to selling certain lines of coverage, then you can position yourself as more of an expert in that area. You’ll want business owners to think of you as the go-to person for that type of coverage, so your marketing efforts will likely be centered around the type of policy you specialize in.

Define Your Target Market

Related to figuring out what type of insurance you’ll sell, new insurance agents should also define their target markets. That means figuring out what types of customers you’ll sell to, such as startup technology companies or small retail businesses.

“In a well-crafted business strategy, a company will identify whether these potential customers are currently being served by another brand, how they might be peeled away from that brand, and what they would need in return for their customer loyalty,” notes Masterclass.

Determine Startup Costs

A sound business strategy also requires figuring out what your startup costs will look like. It can be hard to predict every expense, but you want to be prepared as best you can. In some cases, you may have fixed costs, like obtaining a license. In other cases, you may have more flexibility on your startup costs, and those might be informed by figuring out what you’ll sell.

For example, if you take a broader, more generalist approach to selling commercial insurance, you might want to budget more for a comprehensive website. That could include different pages for different product lines.

Other types of startup costs can include:

• Office space
• Business Software
• Marketing materials

These are just a few of the many areas to consider. It’s important to review these types of expenses so you aren’t caught off guard. By being prepared, you can focus more on business growth. Otherwise, you could be scrambling for solutions. 

For example, if you didn’t budget for any marketing campaigns when starting your insurance business, you might struggle to get your first customers. So, before renting an elaborate office space, you might decide to save more money for marketing. As you build a pipeline of customers, you might then have enough budget for office space.

Create an Operational Foundation

Starting an insurance business requires a strong operational foundation. You might be a great salesperson, but that doesn’t solve everything. If your accounting is messy or you can’t keep track of clients, things could turn south.

So, to create a strong operational foundation, consider turning to technology. Budgeting for operational tools can help you stay organized and discover insights that fuel growth. Specifically, consider technology across areas such as:

• Accounting: If you’re doing your own bookkeeping, accounting software can help you stay on top of your finances. There may be more of a learning curve than if you just put numbers in a spreadsheet, but it’s often worth it. For example, being able to quickly see your income and expenses can help you determine how well your business is doing. And being able to automate areas like invoice management can save you time.  
  
• Customer relationship management: A customer relationship management (CRM) tool can help you keep up with marketing and sales efforts. If you’re launching advertising campaigns to get your first clients, for example, you might end up with several new leads.
  
  Soon enough, you could have more leads than you can keep track of in your head. And since insurance can be a more involved sales process than, say, buying a meal, you might have to follow up with and meet with prospects more than once. So, a CRM can help you with things like deal tracking, helping you organize where leads stand and what you need to do next to move them closer to purchasing a policy.
  
• Insurance quoting: To get your first customers, you can use insurance quoting tools like Wheelhouse. While some prospects need more guidance, and thus you might track their progress in a CRM, others might want self-service options. So, you can offer leads the ability to generate their own quotes on your website. Or, you might create a landing page tied to your initial advertising campaigns. Once leads click through to the landing page, they can generate bindable quotes and get started as customers.
  
  In fact, Wheelhouse has a whole suite of features that make it easier to start your insurance business. From marketing tools to cross-selling capabilities, using Wheelhouse makes it easier for new insurance agents to hit the ground running.

Find Support

With your business strategy and operational foundation in place, you can start growing your insurance business. But you don’t have to do it alone. Even if you’re a solo agent, consider areas where you might need support.

For example, when designing marketing campaigns, you might go further if you enlist the help of a freelance graphic designer. Earmarking a bit of budget for that can go a long way toward creating more effective campaigns.

Also, think about where you can find support in terms of networking. Starting any business can be challenging and even lonely, so you might want to connect with other entrepreneurs. Whether that’s with other independent insurance agents or other types of business owners, networking can help you learn business development tips, avoid mistakes and gain emotional support.

Gaining that support, along with establishing the other components explored in this article, can help you start a successful insurance business.