Aside from experience and capital, of course, what else do you need to start an insurance company? Does it require a lot of state licenses and things of that nature like opening up a bank or trust does? Any and all info would be helpful, Thanks in advance!
There are substantial financial and legal requirements you have to meet in order to start an insurance company. For instance, if you sell a policy with a $1 million limit; you need to have a million on stand by just so you can cover any losses that may come up.
Every state is different, you should check with the department of insurance in your state. Also, companies are regulated by the state on rates and forms used. It would be cheaper to buy an existing company.
I assume that you mean insurance agency and not a company–therefore my answer is based on starting an agency.
Depending on what state you are in and their specific requirements, you will probably at least need your P & C (property & casualty) license as an agent & a separate P & C license as a broker if you want to write excess or surplus markets (this license also usually requires a bond). Many states will also require that you obtain E & O (Errors & Omission or Professional Liability) Insurance–the insurance companies will require this to give you a contract or appointment even if the state doesn’t require it. You will also need a Certificate of Occupancy for your office space and in some states they also require that you obtain a Basic Business License and that you obtain a state tax registration number for use in filing Property Taxes, Annual Reports, etc. You will also need to obtain a Federal Identification Number to be able to open a bank account (and depending on the state requirements you might have to open two bank accounts–one for Premium/Escrow funds where you keep clients monies and the second one for your operating funds), report unemployment tax, pay Federal withholding taxes, etc.
The most important requirement will be for you to obtain the appointments or contracts from the insurance companies so that you are able to market and sell their products. Without a good company to give you a contract, it will be very difficult if not impossible to be successful. In order to obtain the contracts, I suggest that you start on a Business Plan including a Marketing Plan, Mission Statement, SWOT analysis, etc. Once you have this done you can approach insurance companies that you are interested in representing and go through the steps necessary to convince them that you want an appointment and will be able to successfully and profitably market and sell their policies.
Also FYI starting a “scratch” agency is not easy. Be prepared for 60 to 70 hour work weeks, cold calling, etc. One more point, in my opinion it is better for you to have an independent agency than obtain a contract with an exclusive company. In the current financial market I would not one to put all my “eggs” in one basket by representing only one company–apart from the fact that with some exclusive companies they actually own your “book of business” (the client roster) not you. Essentially that means that they can terminate your contract and keep all the clients that you developed!
I hope this helps. Good Luck!