How to Create an Insurance Company Business Plan


Independent insurance agents need a strong business plan when they intend to start and grow their own company. The plan contains the initial ideas for the company’s products, target customers, competition and funding.

But, just because an owner took the time and effort to prepare an insurance company business plan doesn’t mean it shouldn’t be revised as the company grows. Things will change, and revenues and expenses won’t always match up with expectations.

If you’re curious about how to make your insurance business grow and become profitable, it’s time to revisit your original business plan. Let’s consider the plight of John, an independent insurance agent in Smalltown, USA.

John has been in business for a year working out of his house. He’s gotten a few new clients, but business hasn’t come in as quickly as he had hoped. John decides to review his original business plan and make updates based on where the business is now and where he wants it to go.

We’re going to move through all the must-haves of an insurance company business plan through the lens of John’s updates:

Legal Structure

Since the beginning, John has been operating as a sole proprietor. Now, he feels it’s time to hire his first employee and lease an office to gain credibility. He will need to register the business name with the state, incorporate the business and obtain federal and state tax ID numbers.

Licenses and Insurance

In addition to getting a business owner’s policy and obtaining local business licenses and permits, insurance agents need specific insurance policies to sell their products. Accordingly, John has taken out an errors and omissions policy and a surety bond to cover any professional mistakes, such as overlooking the renewal date for a client’s policy.

John has already obtained an individual insurance license from the state commissioner, but if he incorporates, he will need to apply for an agency license for the company.
Male business owner tells his colleagues about his insurance company business plan

Insurance Products

John’s initial idea was to keep the business simple and sell personal auto and homeowners insurance to individuals. However, he learns that he must widen his product offerings to reach a broader number of potential customers and expand his income.

John decides to add life insurance and commercial insurance products to his offerings. Commercial insurance will include insurance for general business liability, property damage and bodily injuries. He knows that he may need to take additional courses and apply for other state licenses to sell these products, so he includes that in this section of the business plan as well.

The best way for a new insurance agent to offer more insurance products is to join a cluster group. These are groups of insurance agents who join together to sell products of major insurance carriers. Because of their higher number of members, a cluster group can qualify to sell more products and negotiate better rates with large insurance companies than a single agent can by themselves.


John has several competitors in Smalltown who are also independent agents, but they have been in business for several years and have dedicated clientele. They also offer a wider range of insurance products, so poaching their customers would be difficult and expensive.

Smalltown has several captive agents who only represent specific major insurance carriers, such as Allstate, State Farm and Nationwide. These agents are backed with strong corporate advertising campaigns and promotional material from their employers.

Competitive Advantages

Since all of the independent agents offer basically the same products, John has to provide a broad range of products with better service. He needs to position himself as a client’s go-to agent for advice and one-stop shopping for all of their insurance needs.

Competing by offering better service means spending time — whatever it takes — with a customer to accurately determine their needs, provide advice and make practical, affordable recommendations. This will establish John as a trusted adviser and, hopefully, lead to referrals.

Online Presence

John set up a website on his own when he started. However, the website has been ineffective at generating leads for new customers. John needs to hire a website designer to build an attractive and competitive website that will bring in traffic and new leads. It also needs to be mobile-friendly.

As the business grows, John can ask for reviews from satisfied customers to post on his website. He can also collect emails from prospects and build an email marketing program that suggests contacting the agency for free quotes.

Social marketing is a fact of life in today’s markets, so John should increase his online presence with LinkedIn, Twitter, Facebook and Instagram.


John has not been active enough in the community. He needs to join community organizations, like the local Chamber of Commerce, and start networking more. The Agent Support Network of America lists some marketing tips catered to independent insurance agents, including:

  • Contacting real estate agents and setting up partnerships with them
  • Sponsoring a table at community and charity events
  • Creating a referral program with rewards such as movie tickets, gift cards to local restaurants, or discounts on the referrer’s premiums


Create brochures and fliers, and place ads in local newspapers. While consumers head mostly to the internet to search for agents, people still read newspapers and they represent a source for business.

Setting Objectives

The revised insurance company business plan should have quantifiable objectives with measurable performance metrics. As examples, these would include measurement of:

  • New customer leads per month
  • Number of new policies sold
  • Website traffic
  • Leads from website
  • Marketing and advertising budget and expenses


Paying business expenses and funding growth takes money. Although John started his business with savings, income in the first year did not meet the original projections. John will need to prepare a new budget that includes additional costs for advertising, marketing, administrative wages, new licenses, utilities and office rent.

The revised budget will have to specify where the additional funds will come from. He may have to tap into his working capital or consider a small business loan to carry out some of these investments.

An insurance company business plan is the foundation for the growth and development of the company. It is not a stagnant document that gets reviewed once a year and placed on the shelf. It is a road map with guideposts and goals that will enable an owner to reach their objectives. If you’ve been wondering how to make your insurance business grow, revisiting your business plan should be your first step.

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