How to Write an Insurance Company Business Plan
The insurance industry regardless of the business is to sell health insurance, car insurance, life insurance, or any other type of insurance, has been growing on a consistent basis for the last several years.
There is a multitude of reasons why the insurance business continues to grow. First, as people spend more money on products such as cars and motorcycles, they want their investments protected. Also, as individuals get older, unfortunately, health issues set in, which drives the need for health insurance. These are just some of the many reasons why starting and growing an insurance company is an excellent entrepreneurial decision.
As the demand continues to grow for insurance companies, more businesses will be started or seek to expand services to different areas or industries. Regardless of what your entrepreneurial endeavors are for an insurance company, make sure to have a strong foundation for growth. From this, our business plan writer has come up with some helpful hints and strategies when seeking to write an insurance company business plan.
Executive Summary for an Insurance Company Business Plan.
The executive summary section for an insurance company business plan should consist of summarized information from each section of the business plan, especially from the company information section and financial projections segments. However, based on our business plan writer's experiences, insurance company business owners tend to devote significant real estate to explore the insurance company's target market. The reasoning for this is that the main component for success in an insurance company is marketing and sales.
Company Information and Location.
The company information and location section for an insurance company business plan should start by describing what type of insurance will be sold at the company. Next, our business plan writer has found that insurance companies will then describe which insurance carriers they will offer products from. In some instances, they will be aligned with a single insurance provider. In other situations, they are more generalist and work with numerous major insurers. Regardless of business structure, make sure to describe which business structure will be used and describe the benefits involved with this particular choice.
Product Description and Competitive Advantages
Some insurance companies specialize in automobile insurance. Other insurers focus on health insurance. Regardless of which specialty or specialties your insurance company will utilize, make sure to discuss it in your product description segment. Also, make sure to touch upon why customers will purchase this type of insurance. For example, if you sell automobile insurance, then the people are required by law to carry this type of insurance. Once the product description section is complete, then explore the competitive advantages your organization may have over other insurers selling products in your area.
Target Market for an Insurance Company Business
The target market for an insurance company business is almost always geographical. For example, most car insurance companies will target homeowners within 15 or 20 miles of their office location. By selecting geographic parameters, insurance company business owners are able to exploit broad dissemination marketing tactics such as mailers, social media advertising, and other popular forms of advertising that reach a large population effectively.
Industry research for an Insurance Company Business Plan
Insurance company industry research should first start at a national level. Important components in a national level insurance company research segment should include statistics, projections, and trends in the insurance company industry. For example, the US insurance industry currently employs over 2.5 million people. Further, premiums for the insurance industry in 2019 exceeded $1.3 trillion. Finally, on a national basis, State Farm is the industry leader with approximately $65 billion in premiums for 2019. Once your national-level industry research is complete, then explore local competitors and even examine demographic changes in your industry research section.
Owner and Management Section
The owner and management section of an insurance company business plan should start with exploring the business owner's professional and educational histories. An example of this based on our business plan writer's experiences would be discussing the business owner's experiences in the insurance industry. These experiences are often related to previous work histories. Next, support previous work histories with educational accolades such as degrees, awards, and even affiliated organizations during your educational endeavors. By following the structure, insurance company business owners are able to paint the picture of why they are well-suited to start an insurance company business.
Funding Request for an Insurance Company Business Plan
The funding request section for an insurance company business plan should follow a set structure to ensure a well thought out a financial needs assessment. First, her business plan writer and financial projection professional recommends that a potential insurance company business owner make a list of all the items the company will need. Once this list is complete, then break out the items into different categories such as startup costs, equipment, office costs, and miscellaneous. Finally, total up each category and add in working capital, which is monies needed to keep the doors open. This should be the total funding needed to start your insurance company. The final step is to subtract the amount of money you intend to invest in your business. Now, you have the dollar amount needed for funding. The only other action to do now is write up your funding request describing how this funding will be used based on the categories previously discussed.
Financials and Financial Projections for an Insurance Company.
The financial projection section for an insurance company should start with monthly sales premiums. Once this is done, then add in renewal premiums to the mix. This should give you your monthly revenues for the new or existing insurance company. Once your monthly revenues are projected, then subtract your labor costs and other monthly fixed costs like rent, travel, and office supplies. Now you have the first month's projected net profits. The final step is to use growth rates and other financial strategies to determine your annual revenues, costs, and net profits. Always keep in mind that once you are done with your financial projection section of the business plan, a summary should be provided in the executive summary section. In the executive summary section, make sure to discuss first-year revenues, first-year net profits, anticipated net profits for the next five years, and as a bonus, maybe include a ratio or two such as return on equity.
Hopefully, these insightful tips and tricks for writing a business plan were helpful. As always, if you need help with a business plan or financial projections, just send us an email or give us a call.
Author: Paul Borosky, Doctoral Candidate, MBA., Author