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How to Start an Insurance Company

Here are the most important steps required for starting an insurance company.

1. Research the Insurance Industry

If you have never worked as an insurance agent before, it is important that you have a thorough understanding of the industry before you decide to open an insurance company. Running a successful insurance company requires an intimate understanding of insurance products, fantastic management skills, ambition to succeed, and sales savvy.
While lucrative, it can be a challenging industry. You are a source of knowledge and expertise for your clients. People are trusting you to provide a safety net during their most vulnerable moments. You need to be up to the task and willing to handle these pressures with grace.
Already pretty familiar with the industry? Then you can jump straight into reading more about what it's like to actually run an insurance company. Pick up a few books about starting a business, particularly if they are specific to the insurance industry.

2. Write a Business Plan

Whether you are starting an insurance company or another kind of business, it is essential to have a solid business plan in place. This is especially important if you plan to have people funding your venture. Potential stakeholders will want to understand how you are going to bring in clients, differentiate yourself from other insurance businesses in the area, and ultimately make money. Writing a business plan will also force you to think through your vision for the business and how you intend to execute that vision.

3. Get Licensed

If you want to start an insurance company, then it is necessary for you to obtain an insurance license first. In the U.S., you must obtain this licensing from the National Association of Insurance Commissioners - the organization that regulates the insurance industry. The licensing process is time-consuming. You must obtain a license for each state you intend to work in, as well as each kind of insurance you intend to sell.
Before getting your license, you must pass an exam that can require up to 50 hours of coursework. These courses can cost anywhere from $300 to $500 each, along with application fees for the exams.
Selling annuities or variable life insurance requires separate coursework and testing that is overseen by the Financial Industry Regulatory Authority. Separate licensing may also be required if you are starting an agency business rather than a sole proprietorship.