How to write a business plan for an insurance company or agency
Insurance is a profitable business. Competition in this market is serious, but once you invest and organize everything correctly, you can get a solid monthly profit. Find out how to open an insurance company, what you need to start a business, and how to get maximum profit with minimum investment.
Insurance Business for a Newbie: The Basics
Let's figure out how relevant the insurance business is, what pros and cons it has, and what risk factors can overtake you when opening such a company.
You can often hear: "Nobody is immune from ...". And this applies to absolutely everything. People insure everything - from real estate to their own lives. The master will insure the eyesight, the singer - the voice, the perfumer - the scent, etc. Today even pets are insured.
Insurance is so popular that people even insure their health against certain diseases (for example, against tuberculosis). Moreover, there are both voluntary and compulsory insurance.
The decision to open an insurance company will always be correct, since such a service has been, is and will be relevant in the market.
Pros and cons of the insurance business
Positive aspects of opening an insurance company or agency:
- High profitability of the business;
- Increased demand for insurance among various strata of the population;
- The ability to flexibly "customize" your services for a specific region of the country;
- You can open a franchise company and offer services on behalf of any reputable company.
- Difficulties with the preparation of a large number of documents at the stage of opening a company;
- A large amount for the formation of the authorized capital - from 20 million. rubles;
- The need to constantly monitor the market and competitors so that the company is always afloat;
- The risk of various unforeseen situations due to the frequent appeal of people for insurance payments.
Financial model of an insurance company
Brief Investment Memorandum
This business requires serious investments, certain knowledge and does not pay off quickly.
Firstly, it is worth considering that the authorized capital must be at least 200 million rubles (if the company is engaged in a universal type of insurance, except life insurance). For insurance companies providing health insurance services (including life insurance) - 240 million rubles. Reinsurance companies must have an authorized capital of 480 million rubles. Since not many start-up entrepreneurs have such an amount, it is necessary to attract investors, or several founders must make investments.
Secondly, the head of the company must meet certain requirements.
Thirdly, business registration can take up to 12 months, taking into account the receipt of various permits and licenses, so you won't be able to start implementing the idea right away.
Fourthly, you should analyze the market niche in the region where you plan to open a business. Perhaps there is a demand and not enough offers for a certain niche of insurance and it will be relevant to start activities from this particular category.
Initial investment amount - 201 205 500 rubles;
Monthly profit - 9,500,000 rubles;
Payback period - 23 months;
Break-even point - 2 months;
Profitability of sales - 70%.
Description of business, product or service
The business plan of the insurance company can help in solving this problem, with the help of which you can examine in detail all the features of this business and choose the most optimal ways to achieve the goals. The profitability of a business is largely determined by its structure. Agents working in any insurance company have information about the supply and demand for those types of insurance services that have a steady upward trend. Consequently, the services provided by this company will be consistently in demand. There is a direct relationship here. The more thoroughly the business plan for opening an insurance company is worked out, the more clients it will be able to attract, since various types of insurance, including compulsory and voluntary, are becoming more widespread in Russia.
Raised investments in the amount of 120 million rubles and opened a store. In the process of work, we received a competent detailed business plan: a detailed description of the investment, a sales plan, an assessment of the market and project payback.
Gary Spartakovich, Grocery Supermarket Owner
I was very pleased with the efficiency and professionalism of the specialists. The high quality of this project made it possible to positively resolve the issue of financing. As a result, we received a loan in the amount of 200 million rubles.
Rakcheeva L. Financial director of wholesale clothing trade.
Based on the business plan, we opened our own production of drywall in the amount of 20 million rubles. The business plan contains a lot of useful information on our new line of business, the financial part is well developed. The business of the main competitors is described in great detail.
Arzhanov A., Director of drywall production
With the help of a business plan developed and drawn up by BizplaniKo, a long-term credit line was opened for this project for 5 years in the amount of 50 million rubles. for the wholesale of fuels and lubricants.
V. Ponomarev, owner of the company for the wholesale trade of fuels and lubricants
I was very surprised by your thorough approach to business analysis, with the development of a complete financial plan for investments and a schedule for their repayment.
R. Ardoev, Director of Reinforced Concrete Products Production
Over the past 5 years, I have not had to work with a more professional company. It took one call and five letters so that people unfamiliar with you and what you are going to do would penetrate the project and calculate it with detailed accuracy.
Insurance today is considered one of the most promising and fast-growing areas of Russian business. The generally accepted classification has three main types of insurance: personal, property and liability. Auto insurance should be distinguished into a special category, which attracts more and more entrepreneurs every year.
The interest shown by enterprising people in this type of activity is understandable - the number of cars is steadily growing, at the same time, the share of vehicles purchased on the primary market is growing. Most people buying a new car prefer to protect themselves from the risk of damage or theft of property by concluding a CASCO agreement. In addition, motor third party liability insurance (OSAGO), recognized as compulsory in our country since 2021, does not lose its relevance today. Learning how to open an auto insurance office and what schemes exist in this industry will help you start your own business with good prospects.
Auto insurance as a business
In a broad sense, insurance is a special type of relationship between two entities, one of which is the policyholder is interested in protecting himself, his property and his liability from all kinds of adverse events. For this purpose, he concludes an agreement with the insurer party, in which the insurance object, the amount of the insurance premium, as well as the amount and procedure for making payments are indicated without fail.
The insurer, in turn, having a certain capital, assumes obligations to compensate the insured for damage in the event of an insured event within the framework established by the contract and current legislation. The goal of any insurer as an entrepreneur is to make a profit, and the effectiveness of such a business directly depends on the number of transactions concluded. You can ensure the financial stability of your company only by creating a sufficient insurance fund.
Important! It should be understood that insurance in general, and auto insurance in particular, is a rather risky type of activity, since the occurrence of an insured event, and hence the need to make payments several times higher than insurance premiums, does not depend on the entrepreneur providing such services.
As for the objects of activity, auto insurance as a business provides for 2 fundamentally different areas:
- CASCO property insurance is voluntary, the vehicle itself acts as an object, it is insured against possible damage, as well as against theft;
- Compulsory OSAGO liability insurance is an object the property interests of the car owner are recognized, which are associated with obligations arising as a result of harm to health and life of third parties, as well as their property (in other words, in the event of an accident that occurred through the fault of the insurer, the insurance company compensates for possible damage to the participants in such an accident within the framework specified in the contract).
As domestic practice shows, it is impractical to work in only one direction. The fact is that OSAGO is strictly regulated by state authorities, tariffs for this type of insurance are set exclusively by the Government of the Russian Federation. The entrepreneur-insurer cannot influence the final cost of the policy. According to experts, a business designed only for the sale of OSAGO insurance is deliberately unprofitable.
In turn, CASCO opens up good opportunities for the insurer to earn money, as it involves independent management of tariffs and correction factors. However, due to its high cost, and also because it is not mandatory, CASCO is much less in demand among car owners.
The optimal solution for an auto insurance business is to combine both directions, as well as to provide additional paid services, for example:
All these items can be included in the cost of insurance.
Having got a general idea of auto insurance, let's understand the issues related to business organization.
Various types of compulsory and additional insurance are an integral part of our life. We will study the main advantages, features and subtleties of working in the insurance market using the example of an insurance broker's business plan. Undoubtedly, many people prefer to independently study various offers from insurance companies, but a more convenient way is to use the services of organizations specializing in the selection of optimal insurance conditions from the many existing on the market.
Competition is high, but if you cover the widest possible range of services and get favorable terms of cooperation or even exclusive rates, then the business can become profitable and profitable due to the scale of the volume of transactions.
Application of business planning methodology in economic activity
Business planning is a complex and multifaceted process that requires advanced analytical skills, structural thinking, and an understanding of major financial and economic categories. If you started this process, then take as a basis for designing an insurance broker's business plan, which will combine your skills and abilities and business specifics in one understandable document.
Its structure and content allows you to depict the full cycle of activities from analytical work to specific actions for the implementation of the project. And an even greater plus is the presence of a developed analytical apparatus that allows you to calculate important financial indicators and economic benefits from implementation.
Example of a step-by-step insurance broker business plan
Table of Contents
Typical industry stages and features and their accounting in the business plan of an insurance broker
If we consider the goal of the project as the organization of a universal company - an aggregator of insurance services, then it is necessary to highlight the main target segments: health and property insurance for individuals, property and business insurance for legal entities.
When formulating the main part of an insurance broker's business plan, it is important to consider the main stages of work in the industry: