Do I Need a Business Plan for My Insurance Agency?

Fran Majidi April 8, 2019
insurance agency business plan

If you’re starting an agency, you’ll need a business plan and for several reasons. Not only will a business plan help you plan and measure your progress every step of the way, it is a sales tool for getting investors and a resource for hiring the right employees. Most importantly, you’ll need a business plan when you’re looking for carrier appointments. Some carriers will use this plan to determine whether or not to allow you to sell on their behalf.

A business plan for an insurance agency is a living and breathing document that changes shape as your business develops, grows and changes. Make sure to revisit this document several times a year and tweak it according to the shifts your agency experiences.

Generally speaking most business plans for insurance agencies are about 20 to 30 pages long. We’ve included a link here to a free template so you can get started.

Components of a Business Plan include the following elements so gather this information before you begin working on the template you download!

Executive Summary

This is the first section of a business plan. It summarizes the essential parts of your plans, without too much detail. Most importantly, it states your objectives. Stating what you hope to achieve is the most important part of this document so that the reader is clear on what you want. You will want to review your entire document and write this at the end.

Agency Description

First, describe your agency and also describe what you hope your agency will be in the future. For example, you may be a two person team now who only sell P&C but you are looking to expand and add life and health insurance agents to your team. Let your readers know this.

Business Objectives

Describe what you plan to do to make your multi-vertical objective a reality. Mention every single way you plan to work towards your objective (i.e. $100,000 dollars in revenue in Property and Casualty and $100,000 in Life and Health). For instance, state how many quotes you aim to give pers month and what percentage you predict you’ll close. Add that you’ll be buying leads from a reputable company like SmartFinancial as part of your strategies. If you’ve bought another agent’s book of business, write that you will be mining this source and cross-selling to your own existing book of business.

Market Analysis

In this section, you’ll want to show how much you know about the insurance industry and what you see in the future. List areas of potential sales and growth and areas that will be more challenging and why. For example, knowing that cyber insurance is an emerging product, you’ll list that as a trend and you’ll mention contacting all you business insurance clients to cross sell this product which is not included in a general liability policy. Or, let’s say you’re trying to sell more homeowners insurance products to consumers. Create a profile of these consumers, by listing age, gender, occupation, location, etcetera. Estimate how many of your auto insurance clients will switch their homeowners carriers for a bundle deal.

Build out a section on your competitors: Who are they? In which areas do you compete with one other? What is their market share? Try to compare yours and their strengths and weakness to figure out where you may have some leverage. This section will be very helpful for you when fine-tuning your brand and establishing what sets you apart from the competition. If you have a hard time with this section, working through it will give you a much clearer “plan of attack.”

List your weaknesses, challenges and ceilings. For example, you may be unable to hire a life and health agent like you’d like to do, due to the high cost of labor (hence, the need for a loan). Or, you may be limited in your knowledge of marketing and technology, which makes generating leads very difficult. Here, in the plan, you can detail solutions. For instance: Instead of relying on limited resources and technology to do our own marketing, state that you will be buying quality leads from SmartFinancial instead. For your own sake it would be good to compare the costs of hiring people to do your blogging/social media versus buying leads.

Business Operations

Here you’ll want to explain what kind of corporation you have. Is it a C, S or LLC? Or, do you have a general or limited partnership? If there are multiple owners, list them here and give some information about each owner’s background and role in the company.

If you have employees, list them here and explain their role and responsibilities. If you plan to hire more employees, list what they will be doing.

If you do not yet have an office, write down your requirements for the physical location you will need. Where should it ideally be? How far is it from your top competitors? Will you be seeing clients here? How about customers? List the estimated costs of running the space, making sure to include rent, bills, furniture, equipment and everything else you’ll need to run the office.

Products and Services

List all the insurance products you plan to sell. Include add-ons like gap insurance, roadside assistance, surety bonds, flood and earthquake insurance.

Do you plan to offer service aside from insurance? For instance, will your life and health new hire be doing financial advising and retirement planning?

Describe your sales strategy and what you offer customers after a sale. Is there an after-hours call center? Do you work weekends? Long term, what do you offer? Do you have an annual policy review or a requoting process to see if you can offer lower rates?

How do you plan to get more appointments and what is your commission structure?


Do you have a brand? How about a logo, business cards, a website? List everything you have and what you plan to implement/create.

How do you plan to grow your client base? Describe your marketing strategy (direct mail, social media, blogging, email marketing, print or radio advertising, etcetera).

Also, list your expenses here too. Do you plan to make company t-shirts, notepads, pens, hats? How do you plan to distribute these for visibility or do you only plan to give them to employees?


What’s your sales strategy (5-mile radius or nationally)? Will you hire producers or are your agents doing the selling too? Will you be buying leads outside of your usually territory to branch out as much as possible? Will you work with a referral source? Give detailed descriptions here, even of how you plan to recruit new hires. Also, mention it if you plan to buy leads instead of spending money generating leads on your own.

List your expenses and your compensation plans for each employee.

Set commission goals here, too, for the year, the month and the week. Decide how many quotes you will need to give in order to meet your objective.

Forecast of Finances

This is possibly the most important part of your business plan, especially if you are using it for funding or to get assignments. Investors (or creditors) will also use this for a clear picture of what to expect from you.

Make sure the amount of money you’re requesting matches the itemized projections in your business plan.

Here, you should create a detailed estimate of your forecasted revenue. This is important to creditors and carriers alike. Create realistic estimates otherwise you will raise red flags. It’s good to be optimistic without setting unrealistic expectations, which carriers and creditors will recognize right away.

  1. Sales: You’ll need to forecast your sales over the next three years, the first one month-to-month and the second and third year in quarterly segments. Separate each line of insurance. Calculate all costs of revenue, for instance if you’re buying leads for prospects, make sure it’s in your sales forecast and it is deducted from your gross revenue to determine your forecasted gross margin per policy.
  2. Expenses: Create a forecast for startup expenses and one for operating expenses. Startup expenses include licensing fees and other costs that are unavoidable when starting an agency. Things like rent, electricity, salaries and budget for buying insurance leads fall under operating expenses.
  3. Cash Flow Statement: For each month, you’ll need to show how money flows in and out for your business. This statement should include things like cash revenue from sales, owners distribution, payroll, operating expenses, startup expenses, line of credit interest, line of credit repayments, dividends paid, etc.
  4. Income Statement: Show what your net profit is, using numbers from your sales, expenses and cash flow forecasts. Again, this is a projection but should give your creditors/carriers an idea of how much you will be making.
  5. Balance Sheet: Here is where you list your assets and liabilities. For instance, if you own land, it goes here. So does furniture, etc. Your liabilities are credit balances, like loans and credit cards.
  6. Break Even Analysis: You’ll need to show your investors and carriers when you will no longer be in debt. This is that sweet spot when your total expenses are equal to your sales volume and you’re making more than you owe.

We wish you the best of luck. We are always here to help you grow your return on investment.

The SmartFinancial Team