Opening an insurance company requires serious financial investments and a good knowledge of the insurance field, and the constantly growing competition does not allow you to relax. But if we take into account the fact that the demand for insurance services only increases, it is promising and profitable to be in the insurance business.
Business plan for opening an insurance company
Relevance of the business idea
The insurance business is an ancient industry. People have always wanted to secure their property from trouble. The population is interested in insurance products, people actively draw up contracts for insurance of life, health, property to provide protection from the occurrence of certain events or to receive a certain amount in case of their occurrence.
The profession of an insurer is considered one of the most promising. For example, entrepreneurs are interested in insuring their business. In case of an industrial emergency, there should be a reserve of funds to cover losses without involving creditors. But not everyone can raise and maintain that reserve. Insurance companies will come to the rescue.
The same goes for life insurance – if a person wants to make sure that his relatives are not left destitute after his death, he can go to an insurance company and insure his life.
Types of Insurance Companies
There are different types of insurance companies. As market participants, they can be classified according to the following characteristics:
By the nature of the insurance product:
- Companies that provide life insurance
- Companies providing other types of insurance besides life insurance
- Companies providing mixed insurance
- Companies focused on insurance of individual risks.
By nature of operations performed:
- Primary insurance
- Reinsurance
By territory:
Central, which operate within the entire country
Regional – operate within the region
By affiliation:
Governmental (socially significant risks, risks that affect the security of the country, macroeconomic risks)
Governmental – embrace non-profit organizations that operate within the framework of a particular government program.
Private
How to open an insurance company
This business requires large capital investments and efforts, but it is worth it.
Before opening an insurance company, it must be registered. Insurance can only be handled by a legal entity, so the first thing to do is to decide on the form of ownership. This can be a limited liability company, a non-public company or a public joint-stock company.
Is it worth it to take a franchise?
As with any entrepreneurship, you can try to develop your own brand or take advantage of someone else’s experience.
Starting your own business is an extremely risky idea. There are thousands of reasons why your own insurance company may go bankrupt. Buying a franchise is a kind of insurance against failure, because a professional franchisor carefully monitors the work of the franchisee, thus preventing mistakes that lead to the closure of the business.
Do not forget that in the service sector plays a big role brand enterprise. When starting your own business, keep in mind that it will take a lot of time to build up a reputation as an insurance company. When you buy a franchise, you are buying a well-known brand that is already trusted by potential customers.
If you decide to buy a franchise, check the seller – all advertising is good, but the pitfalls start later. For example, promotion methods will not work, or the most you’ll get from the business advice – advice on the choice of office.
What is more profitable – a franchise or own business? The answer is extremely ambiguous. If you buy a franchise, you can quickly recoup your investment by using a well-known brand, a proven business model. Own business, started from scratch, pays off more time.
Features of running an insurance business
In order for investments to be effective, before opening an insurance business you should study the prospects of insurance development in the region, the dynamics of change in the market over the past 3 years, and in regional cities – competition.
That the insurance company was profitable and kept afloat, set rates that are lower than those of competitors. Provide a wider range of services that can attract more customers and keep existing ones.
In the insurance business, a lot is decided by human resources, so it is important to hire professionals. Attract in the beginning will have a good premium and a high level of payment.
