How to start an insurance agency from home

Selling insurance from home can be an appealing option if you want to maintain independence and flexibility in your professional career. Doing business in a remote setup, however, is no simple feat. It requires a lot of patience, hard work, and dedication to succeed.

Insurance Business gives you a step-by-step guide on how to start an insurance agency from home in this article. We will also discuss the pros and cons of a home-based insurance sales business and how to keep it profitable.

If you’re trying to work out whether selling policies remotely suits you, this guide can help. Read on and find out how you can launch a successful insurance agency from the comfort of your own home.

Starting an insurance sales business is a challenging venture. The competition is fierce, while market and regulatory changes come in a snap. Selling insurance from home isn’t any different. For your business to grow, you must be willing to put in the effort.

Here are the steps on how to start an insurance agency from home:

Step 1: Prepare a solid business plan

Starting an insurance agency from scratch requires careful planning and preparation. Having a deep understanding of how businesses operate is a key part of this.

Knowing how companies work allows you to create a solid business plan. This will serve as your guide for steering your business towards profitability. Apart from this, a strong business plan helps you identify target markets and raise funding for your agency.

Here’s a sample checklist of what your business plan should include:

Step 2: Secure funding

The amount of funding that you need depends on a range of factors. These include the structure of your business, where you live, and the types of policies you decide to offer. Be sure to come up with sufficient funds to cover your business’ daily operational expenses, including:

• equipment
• licensing costs
• business registration expenses
• technological costs
• insurance coverage

You will also need enough funds to maintain a positive cash flow in the first few years. If you don’t have the means to meet the required financing, there are a few steps you can take. You can apply for a business loan or a government grant, or you can turn to crowdfunding.

Step 3: Meet licensing and other business requirements

Even if you’re starting your insurance agency from home, you may need to comply with several registration and licensing requirements to operate legally. The requirements may vary depending on where you live, but generally include:

Registered name

You must register the name of your insurance agency and pay the corresponding registration fee. Some states ban or limit the use of certain terms in a business name to avoid misleading the public.

State registration

All types of insurance businesses need to register as a “resident business entity” through their state insurance commissioner’s office. These include home-based insurance agencies.

Business permits and licenses

Depending on your address, you may need to get a general business permit to run your insurance agency legally. You can find the complete list of permits and licenses on the SBA’s business licenses and permits webpage.

Tax identification number

If your insurance agency is structured as a sole proprietorship or a single member LLC, you may use your Social Security number when filing taxes. Partnerships and corporations are required to use their federal employer identification number (FEIN).

Step 4: Set up your home office

The right setup plays a key role in helping your home-based insurance business succeed. Equipment-wise, you will need to invest in:

• a reliable laptop
• strong internet connection
• video-conferencing software
• a good headset
• smartphone with excellent reception

Since you’ll be spending a great deal of your time selling insurance, it can help if you have a quiet space in your home where you can set up a workstation.

Step 5: Get familiar with the latest technology

Many insurance companies are doing away with paper applications. That’s why it’s important to familiarize yourself with how e-applications work, especially if you’re selling policies remotely.

Insurers are likewise automating key processes, including underwriting and quoting. So, it’s crucial that you understand how these systems work.

Additionally, you can consider investing in customer relationship management (CRM) software to keep your records organized.

Starting your own insurance agency from home has its share of benefits and drawbacks. Here are some of them.

Pros of running an insurance agency from home 

Operating your insurance agency remotely comes with these advantages:

• enables you to rededicate the time you would’ve otherwise spent on commuting to growing your business
• allows you to increase productivity because you’re free from the distractions of a traditional office setup
• lets you save money as selling insurance from home reduces your transportation, wardrobe, and meal expenses
• gives you greater flexibility in the time and amount of time you spend on work

 Cons of running an insurance agency from home

On the flipside, there are also disadvantages of selling insurance from home, including:

• may require you to allocate a portion of your home to your business, which can be hard if your house doesn’t have extra space
• can feel isolating, especially if you’re running the business on your own and don’t have co-workers to talk to
• the lack of community can be stressful
• requires a certain level of technological know-how because you’re responsible for maintaining your equipment and solving technical issues

Here’s a summary of the pros and cons of starting an insurance agency from home:

If you’re starting an insurance agency from home, the success of your business will depend largely on the kind of relationship you build with clients. Here are some practical strategies for strong connections with customers to help your business grow.

Set goals

Setting goals gives you a clear picture of where you want your business to go. It also helps you come up with ways to reach these targets and gives you ideas for new products and services.

Having definite objectives plays a key role in keeping you and your agents engaged. If set correctly, your business goals can help you measure how successful your insurance agency is.

Provide good customer service

Practicing excellent customer service is important in building and maintaining trust with your clients. This requires the ability to understand each client’s unique needs. Good customer service is also the best way to get referrals, which are among the simplest yet most effective ways of expanding your business.

Develop empathy

When it comes to insurance, people often already know that they need coverage. What most clients may not necessarily understand is what specific policies can address their needs. The best insurance agents have the empathy to identify the right coverage that customers need.

Drive and nurture fresh leads

Success in the insurance market means having to continuously drive leads. There are several strategies that can help your insurance agency tap new leads, including targeted marketing and multi-channel lead generation. Get great ideas on how to find insurance leads in this guide.

Understand that selling insurance is a long game

Trying too hard to sell insurance right away is guaranteed to ruin people’s trust. This is why you should focus on building good relationships instead. By being patient, you’re more likely to secure a long-term client who may be willing to refer you to other potential customers.

Maintain a professional impression

Selling insurance from home sometimes involves working outside a professional setting. This doesn’t mean, however, that professionalism goes out the window. If you want to be taken seriously in the industry, you must learn how to communicate and dress professionally.

There are very few barriers if you want to start your own insurance agency even if you’re lacking in industry experience. All you need is the right business permits and insurance licenses and you’re all set.

But is launching an insurance business without experience a good idea? Probably not.

Running your own insurance agency requires careful planning and preparation. This includes having a certain level of industry experience, which puts you in a much better position to succeed. Even so, it doesn’t shield your agency from the challenges facing businesses.

Several years of experience as an insurance professional can help build the necessary expertise to run an insurance agency. You can also use these years to establish your network of insurance carriers. These providers play an important role in helping you access different insurance products. They can also help widen your client base, which will serve as your agency’s lifeline.

Launching your own insurance business often requires heavy financing. On average, aspiring business owners will need startup capital ranging from $50,000 to $500,000, possibly even more.

If your personal savings aren’t enough to meet the necessary financing, it doesn’t mean that your dream of starting an insurance agency from home is over. Here are some ways to raise capital:

Apply for a business loan

This is the most common way for businesses to secure funding. You can apply for a business loan through banks and other lenders. To get approval, you must present a solid business plan and have a good credit history.

Secure an SBA-guaranteed loan

The Small Business Administration can act as a guarantor to help businesses secure bank approval through an SBA-guaranteed loan.

Search for government-sponsored grants

The government is implementing several financial assistance schemes to help new businesses. You can visit grants.gov for funding to help jumpstart your home-based insurance agency.

Turn to crowdfunding

Crowdfunding websites provide a low-risk option for businesses looking for donors.

If you’re starting an insurance agency with limited funding, it may be better to partner with insurers that provide ongoing support and training. Allstate, Farmers, and Liberty Mutual are some insurance giants that run programs offering training and assistance to help you launch your business.

One of the ways to keep your insurance agency profitable is by keeping abreast of the latest industry trends. You can do so by subscribing to our daily e-newsletters. By joining our mailing list, you can access breaking news and get updated on industry developments as they happen. Subscription is free.

Did you find our guide on how to start an insurance agency from home helpful? Do you think launching an insurance business remotely is a good idea? Let us know in the comments.