Insurance Business Plan Template & Example

Written by Dave Lavinsky
insurance agency business plan template
Table of Contents
Table of Contents

Insurance Business Plan

If you want to start a successful insurance agency or expand your current insurance business, you need a business plan.

The following sample insurance business plan provides the key elements to include in a successful insurance agency business plan.

You can download our Insurance Agency Business Plan Template (including a full, customizable financial model) to your computer here.

 

Insurance Business Plan Example

I. Executive Summary

Business Overview

[Company Name], located at [insert location here] is a new small business insurance brokerage firm finding property, casualty, and health insurance to its clients. The company will operate in a professional setting, conveniently located next to [notable bank] in the center of the shopping district. [Company Name] is headed by [Founder’s Name], an MBA Graduate from UCLA with 20 years of experience working as an insurance broker for businesses and individuals.

Services

[Company Name]will focus on close client relationships. It has a full-time assistant who, among other things, will focus on answering client’s daily questions and drafting newsletters to increase client communication.

The founder, [Founder’s Name], will also focus on answering his clientele’s needs. In addition to newsletters and email updates, [Founder’s Name] will hold webinars on insurance concerns for clients.

[Company’s Name] services include finding all types of small business insurance: health, property, casualty, renter’s, and key employee. By offering every type of insurance a small business may need, [Company Name] will become a long-term partner with each client rather than a one-time transaction.

Customer Focus

[Company Name] will primarily serve the businesses within a 20-mile radius of our location. The demographics of these customers are as follows:

  • 1,500 businesses
  • Under 100 employees (Average is 42)
  • Privately held companies
  • Top represented sector: Retail stores
  • Average annual payroll for firms with 20–99 employees of $1.3 million

These small businesses are often growing and in need of additional insurance as they grow. Furthermore, [Company Name] will seek contacts with business startups in order to find insurance for them from the time of their launch on.

Management Team

[Company Name]’s most valuable asset is the expertise and experience of its founder, [Founder’s Name]. [First name] has been a licensed insurance broker for the past 20 years. He has spent much of his career working at One-Stop Insurance Brokers, Inc. There he specialized in personal insurance for 10 years before moving to specialize in business insurance for the next 5 years.He sold business insurance to over 1,000 firms during that time.

[Company Name] will also employ an experienced assistant to help with various administrative duties around the office. [Assistant’s name] has experience working with C-level executives and has spent significant time as an administrator.

Success Factors

[Company Name] is uniquely qualified to succeed due to the following reasons:

  • [Company Name] will fill a specific market niche in the growing community we are entering. In addition, we have surveyed local businesses and received extremely positive feedback saying that they explicitly want to make use of our services when launched.
  • Our location is in an economically vibrant area where new businesses are starting at a fast rate.
  • The management team has a track record of success in the insurance brokerage business.
  • The local area is currently underserved and has few independent insurance brokers offering specific expertise in the full range of small business insurance.

Financial Highlight’s

[Company Name] is seeking a total funding of $160,000 of debt capital to open its office. The capital will be used for funding capital expenditures and location build-out, hiring initial employees, marketing expenses and working capital.

Specifically, these funds will be used as follows:

  • Store design/build: $50,000
  • Working capital: $110,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even

Topline projections over the next years are as follows:

Financial SummaryFY 1FY 2FY 3FY 4FY 5
Revenue$174,038 $592,543 $1,821,537 $1,822,898 $2,655,557
Total Expenses$227,729 $348,598 $564,931 $818,909 $1,005,844
EBITDA($53,691)$243,945 $1,256,607 $1,003,989 $1,649,712
Depreciation$7,280 $7,280 $7,280 $7,280 $7,280
EBIT($60,971)$236,665 $1,249,327 $996,709 $1,642,432
Interest$10,309 $9,020 $7,732 $6,443 $5,155
Pre-Tax Income($71,280)$227,645 $1,241,595 $990,265 $1,637,278
Income Tax Expense$0$54,728 $434,558 $346,593 $573,047
Net Income($71,280)$172,917 $807,037 $643,673 $1,064,231
Net Profit Margin-29%44%35%40%
Full-time Brokers12233
Client Base1363956951,0191,321

 

II. Company Overview

Who is [Company Name]?

[Company Name], located at [insert location here] is a new small business insurance brokerage firm finding property, casualty, and health insurance to its clients. The company will operate in a professional setting, conveniently located next to [notable bank] in the center of the shopping district. [Company Name] is headed by [Founder’s Name], an MBA Graduate from UCLA with 20 years of experience working as an insurance broker for businesses and individuals

While [Founder’s Name] has been in the insurance brokerage business for some time, it was in [month, year] that he decided to launch [Company Name]. Specifically, during this time, [Founder] met with a former friend and fellow independent small-business insurance broker in Fort Lauderdale, FL who has had tremendous success. After discussing the business at length, [Founder’s Name] clearly understood that a similar business would enjoy significant success in his hometown.

Specifically, the customer demographics and competitive situations in the Fort Lauderdale location and in his hometown were so similar that he knew the business would work. After surveying the local population, [Founder’s name] went ahead and founded [Company Name].

[Company Name]’s History

Upon returning from Fort Lauderdale, surveying the local customer base, and finding a potential retail office, [Founder’s Name] incorporated [Company Name] as an S-Corporation on [date of incorporation].

The business is currently being run out of [Founder’s Name] home office, but once the lease on [Company Name]’s office location is finalized, all operations will be run from there.

Since incorporation, the Company has achieved the following milestones:

  • Found office space and signed Letter of Intent to lease it
  • Developed the company’s name, logo and website located at [website]
  • Hired an interior designer for the decor and furniture layout
  • Determined equipment and fixture requirements
  • Begun recruiting key employees

[Company Name]’s Products & Services

[Founder’s Name] will be able to provide clients with the following services:

  • Health Insurance: finding health insurance deals that work even for small businesses and are able to scale as the company grows
  • Key Employee Insurance: a common need for small businesses, covering employees without whom the company would likely fail
  • Property Insurance: insurance for owned property of the company
  • Renter’s Insurance: insurance for small businesses which rent their facilities
  • Casualty Insurance: product, personal, and other casualty insurance
  • Ongoing Consultation: willingness to discuss insurance needs, requirements, and questions with clients and to better explain to them the options they have and what their plans cover
  • Webinars: For clients and potential clients, regular webinars will discuss topics of interest related to small business insurance

As [Founder’s Name] understands, the key to a successful brokerage business is being accessible and staying in contact with clients. [Founder’s Name] will have a full-time assistant on hand who, among other things, will manage client’s phone calls and answer questions as possible.

 

III. Industry Analysis

Last year, according to IBISworld.com, U.S. insurance brokerage and agencies brought in revenues of $117 billion and employed 965,000 people. There were 381,116 businesses in this market, for an average of $308,000 per business. The average wage paid to an insurance industry employee was $55,736.
Overall, the insurance sector has fundamentally changed. The old practice of incurring underwriting losses, offset by large investment gains, is a thing of the past. As underwriting performances have improved, risk has been priced appropriately. This has triggered soft market conditions, revenue volatility is expected to remain low and the state of primary insurance markets will continue to have a strong bearing on industry prospects.
Key players in the industry include Marsh and McLennan Companies, Inc, Aon Corporation, and Willis Group Holdings Limited. While there are major players, most of the industry consists of small, independent insurance brokers and firms. Large firms often pay significant amounts for an independent broker to join them and bring their client base along.

The following are industry trends identified:

  • “The U.S. is a very litigious climate,” says Bob Prox, senior vice president commercial insurance for Forrest Scherer in Terre Haute. “When someone gets hurt, they get a doctor and a lawyer almost in the same breath. One trend we see is for bigger dollar judgments. The plaintiff attorneys are seeking and demanding greater recovery.” (Allbusiness.com)
  • “Employment Practices Liability Insurance (EPLI) protects employers against lawsuits brought against them by employees, or previous employees, including, wrongful termination, sexual harassment, failure to promote and hostile workplace environment. While it isn’t a new type of coverage, it is becoming more important.” (Allbusiness.com)
  • Flood insurance is a higher interest for areas prone to flooding in the wake of the Hurricane Katrina disaster.

 

IV. Customer Analysis

Demographic Profile of Target Market

[Company Name] will serve small businesses in [company location] and the immediately surrounding area.

The area we serve is suburban, with retail stores as a primary business sector. In addition, some light manufacturing companies have their facilities in the area.

The precise demographics of the town in which our location resides is as follows:

Nashville, TN
Total Population611,577
Total Businesses38,124
Forestry, Fishing, Hunting, and Agriculture Support0.29%
Mining0.35%
Utilities0.23%
Construction9.64%
Manufacturing4.16%
Wholesale Trade5.62%
Retail Trade14.54%
Transportation and Warehousing2.83%
Information1.81%
Finance and Insurance6.56%
Real Estate and Rental and Leasing4.75%
Professional, Scientific and Technical Services11.36%
Management of Companies and Enterprises0.69%
Admin, Support, Waste Mgt, Remediation Services5.15%
Educational Services1.20%
Health Cate and Social Assistance10.80%
Arts, Entertainment and Recreation1.66%
Accommodation and Food Services8.59%
Other Services (Except Public Administration)9.78%

The Company will primarily target the following three customer segments:

  1. Business Startups: Startups are overwhelmed by the amount of information they must take in and the speed at which they must learn. They often seek insurance brokers to handle all insurance requirements while looking out for their company’s best interests. As these companies grow, they tend to stay with the same insurance broker as long as they are assured that the broker continues to seek the best deals and negotiate on their behalf whenever possible. Business startups have a great need for information and seek out advice on the ins and outs of insurance often.
  1. Employer firms of up to 99 employees: Small businesses of this type need a wide range of insurance and can benefit through time savings by using a one-stop insurance broker. Often the CEOs of these firms delegate the job of finding insurance to an employee or manager, although the CEO is generally interested in knowing that the right coverage at a good price. Although these firms may be more knowledgeable about insurance, they still have a lot to learn about what their insurance does and does not cover and how they can reduce business risk once they know.
  1. Non employer firms: Businesses owned and operated by the same person are often unaware of the proper insurance requirements and may be operating without the right coverage. These owners take on a high amount of liability personally, and are in great need for expertise to guide them towards a safer way of doing business. Specifically, these firms need key employee Insurance, some types of casualty insurance, and property or renter’s insurance to protect their assets.

 

V. Competitive Analysis

Direct & Indirect Competitors

The following small business insurance broker age firms are located within a 20-mile radius of [Company Name], thus providing either direct or indirect competition for customers:

Small Biz Insurance

Small Biz Insurance is an owner-operated business run by Bob Johnson. Having started the business ten years ago, Johnson operates out of his home to keep down costs and meets with small businesses in the surrounding area at their offices. Johnson focuses primarily on casualty insurance and does not deal with health insurance providers. .

Small Biz Insurance has an estimated $300,000 in annual revenue and serves a small subset of area clients. However, its name and focus on small business insurance bring it to the top of local search rankings, causing many small businesses to consider working with Johnson.

Marsh Inc.

Marsh Inc. is part of Marsh & McLennan companies, a vast insurance and consulting company with 57,000 employees and revenue of $12 billion. Marsh itself employs approximately 40,000 people with $6.9 billion annual revenues. It’s nearest office location is in [city name].

Unlike [Company Name], whose revenues will come entirely from commissions from insurance companies, Marsh receives advisory fees for locating property and casualty insurance for its clients who are mainly large companies, but include some small companies. This arrangement helps to maintain the company’s reputation as an impartial advisor, but generally makes insurance more expensive for their clients.

Small business clients go to Marsh because of its wide presence on the Internet, public brand awareness, and track record. However, many startups and small businesses cannot afford the fees of working with Marsh and instead seek insurance directly from insurance providers.

One-Stop Insurance Brokers

One-Stop is a local firm with 100 active brokers serving the [company location] area. One-Stop has approximately 70 brokers selling business insurance and 30 selling personal insurance. Local small businesses have increasingly used One-Stop brokers for their small business needs over the past ten years. [Founder’s Name] was one of the lead salespeople at One-Stop while he worked there.

One-Stop attempts to offer all types of insurance to business clients, going beyond the needs of small businesses. Some small businesses have expressed that they do not receive adequate customer service from their One-Stop brokers due to the larger clients that these brokers are also trying to serve. Furthermore, One-Stop does not provide intellectual property through newsletters, online content, or seminars, specifically aimed at small business audiences.

Competitive Advantage

[Company Name] enjoys several advantages over its competitors. These advantages include:

  • Location: [Company Name]’s location is near the center of town, in the shopping district of the city. It is visible from the street where many small business owners and managers walk to and from work on a daily basis.
  • Client-oriented service: [Company Name] will have a full-time assistant to keep in contact with clients and answer their everyday questions. [Founder’s Name] realizes the importance of accessibility to his clients, and will further keep in touch with his clients through monthly and then biweekly webinars on topics of interest.
  • Management: [Founder’s Name] has been extremely successful working in the insurance brokerage sector and will be able to use his previous experience to grant his clients detailed insight into the insurance world. His unique qualifications will serve customers in a much more sophisticated manner than [Company Name’s] competitors.
  • Relationships: Having lived in the community for 25 years, [Founder’s Name] knows many of the local leaders, newspapers and other influences. Furthermore, he established many relationships with small business owners and managers during his time at One-Stop Insurance Brokers.

 

VI. Marketing Plan

You can download our Business Plan Template (including a full, customizable financial model) to your computer here.

[Company name] will use several strategies to promote its name and develop its brand. By using an integrated marketing strategy, [company name] will win clients and develop consistent revenue streams.

The [Company name] Brand

The [Company name] brand will focus on the Company’s unique value proposition:

  • Client-focused small business insurance services, where the Company’s interests are aligned with the customer
  • Service built on long-term relationships
  • Big-firm expertise in a small-firm environment

Promotions Strategy

Targeted Cold Calls

[Company name] will initially invest significant time and energy into contacting potential clients via telephone. In order to improve the effectiveness of this phase of the marketing strategy, a highly-focused call list will be used, targeting startups and small businesses. As this is a very time-consuming process, it will primarily be used during the startup phase to build an initial client base.

Referrals

[Company name] understands that the best promotion comes from satisfied customers. The Company will encourage its clients to refer other businesses by providing economic or financial incentives for every new client produced. This strategy will increase in effectiveness after the business has already been established.

Additionally, [company name] will aggressively network with business incubators, small business development centers, small business accountants, lawyers working with startups and small businesses, and others in a position to advise small businesses and startups. This network will generate referral leads.

Internet

[Company name] will invest resources in two forms of geographically-focused internet promotion—organic search engine optimization and pay-per-click advertising. The Company will develop its website in such a manner as to direct as much traffic from search engines as possible. Additionally, it will use highly-focused, specific keywords to draw traffic to its website, where potential clients will find a content-rich site that presents [Company name] as the trustworthy, well-qualified insurance brokerage firm that it is.

Publications

[Company name] will place print advertisements in key local publications, including newspapers, area magazines, and business newsletters. Additionally, the Company will print brochures and place them in specific locations frequented by target individuals, such as small business development centers and accountants.

Pricing Strategy

[Company Name]’s pricing will rely on a 10% average commission from insurance companies on premiums sold to clients. The price to clients will be nothing, making the service less expensive than firms like Marsh which charge advisory fees to clients. By seeking quality clients and maintaining long-term relationships with them, [Company Name] will maintain a high average commission rate and earn bonus commissions from insurance companies by providing long-term profitable clients.
 

VII. Operations

[Company Name] will carry out its day-to-day operations primarily on an appointment basis. Clients will make appointments to review their insurance and to discuss renewals. These will primarily occur in-office or on-site at the client’s business in order to increase the strength of the client relationship. If necessary, appointments can be conducted over the telephone.

[Founder’s Name] will work on an as-needed basis, but can be expected to be present in the office during normal business hours. The company will also employ an administrative assistant who will also support marketing and client relationship development efforts.

Milestones

[Company name]’s long term goal is to become the number-one provider of small business insurance services in the [city] area in terms of customer service quality. We seek to do this by ensuring customer satisfaction and developing a loyal and successful clientele.

The following are a series of steps that will lead to this long-term success. [Company Name] expects to achieve the following milestones in the following [xyz] months:

DateMilestone
[Date 1]Finalize lease agreement
[Date 2]Design and build out [Company Name] storefront
[Date 3]Hire and train initial staff
[Date 4]Kickoff of promotional campaign
[Date 5]Reach break-even
[Date 6]Reach XXX ongoing clients

 

VIII. Management Team

[Company Name]’s most valuable asset is the expertise and experience of its founder, [Founder’s Name]. [First name] has been a licensed insurance broker for the past 20 years. He has spent much of his career working at One-Stop Insurance Brokers, Inc. There he specialized in personal insurance for 10 years before moving to specialize in business insurance for the next 5 years. He sold business insurance to over 1,000 firms during that time, brining in revenue of $2 million.

[Founder’s Name] maintains his license in the state of [state] and the states of [other states]. His additional certifications include the CLU (Certified Life Underwriter) designation and the CFP (Certified Financial Planner) designation. [First name] has spoken at regional conferences and taken part in small business and startup panel discussions at the local library, Chamber of Commerce, and small business development center.

[Company Name] will also employ an experienced assistant to help with various administrative duties around the office. [Assistant’s name] has experience working with C-level executives and has spent significant time as an administrator.

Hiring Plan

[Founder’s Name] will serve as the company CEO and president. In order to launch the business we do not need additional personnel, but will hire the following in the future:

  • Insurance Brokers: Hire one additional broker every other year starting with year 2
  • Administrative Assistant: Hire a second assistant in year 3

 

IX. Financial Plan

Revenue & Cost Driver’s

[Company Name]’s revenues will come primarily from the commissions earned from insurance providers on premiums paid by clients. Secondly, revenue will come from bonus commissions from those insurance companies.

[Company Name] will seek an average 10% commission from all insurance providers it works with. New clients will be added consistently each quarter, and most will remain clients as we expect a quarterly client attrition rate of only 2%. We also expect a $1,000 bonus commission to be paid on roughly 5% of clients.

As with most services, labor expenses are the key cost drivers. [Founder’s Name] and future brokers will earn a competitive base salary. The lease on the office location will be the next largest cost. Furthermore, the costs of transactions are projected to be roughly 20% of regular commission revenue.

Moreover, ongoing marketing expenditures are also notable cost drivers for [Company Name].

Capital Requirements and Use of Fund’s

[Company Name] is seeking a total funding of $160,000 of debt capital to open its office. The capital will be used for funding capital expenditures and location build-out, hiring initial employees, marketing expenses and working capital.

Specifically, these funds will be used as follows:

  • Store design/build: $50,000
  • Working capital: $110,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even

Key Assumptions & Forecast’s

The following table reflects the key revenue and cost assumptions made in the financial model.

Number of clients
Year 1136
Year 2395
Year 3695
Year 41019
Year 51321
Bonus Commissions$1,000
Premium Commissions$7,500
Annual rent$36,000

5 Year Annual Income Statement

Year 1Year 2Year 3Year 4Year 5
Revenues
Product/Service A$151,200 $333,396 $367,569 $405,245 $446,783
Product/Service B$100,800 $222,264 $245,046 $270,163 $297,855
Total Revenues$252,000 $555,660 $612,615 $675,408 $744,638
Expenses & Costs
Cost of goods sold$57,960 $122,245 $122,523 $128,328 $134,035
Lease$60,000 $61,500 $63,038 $64,613 $66,229
Marketing$20,000 $25,000 $25,000 $25,000 $25,000
Salaries$133,890 $204,030 $224,943 $236,190 $248,000
Other Expenses$3,500 $4,000 $4,500 $5,000 $5,500
Total Expenses & Costs$271,850 $412,775 $435,504 $454,131 $473,263
EBITDA($19,850)$142,885 $177,112 $221,277 $271,374
Depreciation$36,960 $36,960 $36,960 $36,960 $36,960
EBIT($56,810)$105,925 $140,152 $184,317 $234,414
Interest$23,621 $20,668 $17,716 $14,763 $11,810
PRE-TAX INCOME($80,431)$85,257 $122,436 $169,554 $222,604
Net Operating Loss($80,431)($80,431)$0$0$0
Income Tax Expense$0$1,689 $42,853 $59,344 $77,911
NET INCOME($80,431)$83,568 $79,583 $110,210 $144,693
Net Profit Margin (%)-15.00%13.00%16.30%19.40%

5 Year Annual Balance Sheet

Year 1Year 2Year 3Year 4Year 5
ASSETS
Cash$16,710 $90,188 $158,957 $258,570 $392,389
Accounts receivable$0$0$0$0$0
Inventory$21,000 $23,153 $25,526 $28,142 $31,027
Total Current Assets$37,710 $113,340 $184,482 $286,712 $423,416
Fixed assets$246,450 $246,450 $246,450 $246,450 $246,450
Depreciation$36,960 $73,920 $110,880 $147,840 $184,800
Net fixed assets$209,490 $172,530 $135,570 $98,610 $61,650
TOTAL ASSETS$247,200 $285,870 $320,052 $385,322 $485,066
LIABILITIES & EQUITY
Debt$317,971 $272,546 $227,122 $181,698 $136,273
Accounts payable$9,660 $10,187 $10,210 $10,694 $11,170
Total Liabilities$327,631 $282,733 $237,332 $192,391 $147,443
Share Capital$0$0$0$0$0
Retained earnings($80,431)$3,137 $82,720 $192,930 $337,623
Total Equity($80,431)$3,137 $82,720 $192,930 $337,623
TOTAL LIABILITIES & EQUITY$247,200 $285,870 $320,052 $385,322 $485,066

5 Year Annual Cash Flow Statement

Year 1Year 2Year 3Year 4Year 5
CASH FLOW FROM OPERATIONS
Net Income (Loss)($80,431)$83,568 $79,583 $110,210 $144,693
Change in working capital($11,340)($1,625)($2,350)($2,133)($2,409)
Depreciation$36,960 $36,960 $36,960 $36,960 $36,960
Net Cash Flow from Operations($54,811)$118,902 $114,193 $145,037 $179,244
CASH FLOW FROM INVESTMENTS
Investment($246,450)$0$0$0$0
Net Cash Flow from Investments($246,450)$0$0$0$0
CASH FLOW FROM FINANCING
Cash from equity$0$0$0$0$0
Cash from debt$317,971 ($45,424)($45,424)($45,424)($45,424)
Net Cash Flow from Financing$317,971 ($45,424)($45,424)($45,424)($45,424)
SUMMARY
Net Cash Flow$16,710 $73,478 $68,769 $99,613 $133,819
Cash at Beginning of Period$0$16,710 $90,188 $158,957 $258,570
Cash at End of Period$16,710 $90,188 $158,957 $258,570 $392,389
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