Our Smalltown operation enjoys its own private parking lot for our clients and our staff. A second story was recently added to our office which will allow ample room for expansion. It is presently used for training, staff meetings, and conferences.
Acme Insurance is committed to providing professional sales and service for its insurance customers. We have established what we consider to be an excellent reputation in our area, and are the largest multi-line insurance broker in our trading area.
Acme Insurance provides home, automobile, and business insurance in Smalltown District. We take pride in knowing that for over 50 years we have helped our clients to find the best coverage at the right price that suits their needs and expectations. In the event of a claim, our clients know that we are there to provide help and counsel to ensure a fast, speedy claim settlement.
Like other independent brokers, we issue binders and new policies, endorsements and process renewals.
We also provide insurance services to non-clients, such as lawyers and mortgagees, to ensure our mutual clients have proper coverage and binding notes in place for the purchase of homes, businesses, and automobiles.
Since we are brokers, (not agents such as Co-operators), we have access to a range of standard and specialty markets.
We have recently produced a pamphlet titled “Insurance Partners” which stresses that a successful insurance partnership between the client, the broker, and the company is based upon a new concept.
Not only do the broker and the company take responsibility for proper protection and indemnity in the event of loss, but in the 1990’s, the client must also take his share of responsibility to insure the safety of his property by keeping it well maintained and using qualified professionals to update or change the heating, electrical, and plumbing systems in his home. We stress that multiple claims or claims arising out of poor maintenance may adversely affect his insurance.
In addition to the above, our brokerage uses a number of boilerplate letters on our computer system that are sent along with various types of policies explaining unique features or limitations in the contracts to avoid possible Errors and Omissions claims. They also encourage our clients to contact us about reviewing their coverage and promote other products and services we provide.
We call upon the ample resources of our insurance markets to help with any unusual situations which occur and may present a problem finding proper coverage for our client.
When we required trained inspectors for evaluating the safety of our insured’s solid fuel heating devices and installations, we sent one of our own producers for training and who now has W.E.T.T. certification.
We are proud that Acme Insurance Inc. has never had an errors and omissions loss, but to protect our clients against that possibility, we have in place Errors and Omissions Insurance through our Insurance Brokers Association in the amount of $1,000,000 (Employer’s Reinsurance).
We have been fully computerized since 1982 and both offices and some of our producer’s homes are connected to our main computer server located in Smalltown.
As of February 1996, we have entered into an agreement with our present computer vendor, Teleglobe, to update our computer system to a Pentium server, and to Release 74, which allows upload/download capability with our companies, as well as email.
We have elected to stay with the Teleglobe Tabs system since our staff is familiar with the program. It has exhibited excellent, reliable telecommunications ability. The high speed ISDN lines required for MS Windows-based communication between our branch office as well as our home offices are not available in our trading area, so at present we will not migrate to the new MS Windows-based products available from Teleglobe or Agency Manager.
Although Stan Smith started out as a life insurance agent, the “life” part of our business represents only 1% of our sales. We are looking to strengthen this part of our operation in the future. Due to the complexity and number of life and disability products, we are presently using an outside service: Atlantic-Smith Insurance out of North Town, although two of our general insurance producers have life agent licenses.
We are in the process of setting up a substandard property market. We feel that there is a need for this service and that it can be profitable if strictly underwritten with proper controls in place.
Recent demographic studies in our area reveal a total year-round population of approximately 13,000, which rises in the summer to approximately 25,000. We have a relatively high number of seniors and many younger, newly-formed families dependent on government assistance living mostly in a rural, unserviced, thinly populated area. This makes it costly to service our clients. Long distance phone bills represent our second largest expense (our two offices each have their own toll free phone numbers) and the cost of visiting our insureds to do home inspections is time consuming due to the large area we service.
We are targeting seniors which have proven to be a profitable, stable market for our brokerage in spite of our present difficult economy.
We are fortunate that we have not yet had the intrusion to a large degree of mass merchandising programs like “Silver Power.” Smaller brokers have made inroads into our traditional rural business, with low cost farm markets that sell home and auto insurance. We understand that some of these markets are in a poor financial position and may cease to be a factor in the future.
Our market consists of senior citizens, lower-income young families (many of who are on social assistance) and the small, family-run business (many of which are seasonal and based on the tourist trade). There are a few industrial risks and those that are located here are branches of larger industries which obtain their insurance through large brokers in Bigtown.
Our target market is the seniors, family business, and middle income earners in our area. Statistics show that over 42% of our permanent population is above 45 years of age. The average family income is approximately $27,000 and the unemployment rate 9%.
We are cautious about encouraging business from lower income prospects since they tend to have wood heat, homes in poor repair, and many attempt to install and repair their own plumbing, wiring, and heating systems.
Another market of concern is out-of-area clients who may have been payment or claim problems to local brokers and attempt to find a distant broker to provide coverage instead of making the necessary adjustments in their own lifestyle to prevent claims.
Clients who have moved repeatedly can be difficult to obtain proper underwriting information and past claims experience on, and we feel our staff is to be commended for their ability to properly assess if a client should be placed to our standard markets or would be better served by a specialty company.
Market Analysis | |||||||
1996 | 1997 | 1998 | 1999 | 2000 | |||
Potential Customers | Growth | CAGR | |||||
Ages 0 to 14 | 2% | 2,550 | 2,601 | 2,653 | 2,706 | 2,760 | 2.00% |
Ages 15 to 44 | 2% | 4,760 | 4,855 | 4,952 | 5,051 | 5,152 | 2.00% |
Ages 45 to 64 | 5% | 2,885 | 3,029 | 3,180 | 3,339 | 3,506 | 4.99% |
Ages 65 to 74 | 5% | 1,280 | 1,344 | 1,411 | 1,482 | 1,556 | 5.00% |
Other | 2% | 1,000 | 1,020 | 1,040 | 1,061 | 1,082 | 1.99% |
Total | 3.03% | 12,475 | 12,849 | 13,236 | 13,639 | 14,056 | 3.03% |
The past few years have seen tremendous upheaval in the insurance industry. The number of players has decreased in both the broker and company communities. The automobile product has, in the mind of the public, become unaffordable, unavailable, and impossible to understand. The recession has curtailed insureds from properly maintaining their homes and automobiles, and to exacerbate the situation, many clients have turned to wood heat and started doing their own repairs and maintenance which may have increased the number and severity of claims. Insurance fraud has become a major issue for the entire insurance industry.
Our traditional close relationship with our companies has been strained. Brokers are concerned that in spite of commission reductions, quotas, contract cancellations, and refusal to write new auto business by some markets, they now may find themselves in competition with some of the traditional broker distribution companies that are setting up direct marketing facilities and branches. The banks, even though thwarted by the federal government in its last budget to retail insurance from their premises, will continue pressure on the government and now have announced they will open stand alone insurance offices to retail insurance.
The new federal government is close to adopting a new automobile contract that hopefully will make it affordable, understandable, and available to our clients. A profitable automobile product will entice the companies to aggressively seek new sales and more brokers will see companies offering contracts.
Local independent brokers Cal Roberts, Patrick C. Johnson, Rob Champlain
Mass Markets
Our own Companies
Mass merchandise programs heavily advertised over the radio such as “Gray Power”
Group Plans – teachers, public employees
The main volume of income for our brokerage is generated by automobile premiums because they are relatively higher priced to insure than property, and because automobile insurance is mandatory in the region.
As stated previously, our success is dependent on our staff and our companies convincing our clients and prospective clients that price, although important, is not the only criteria for the purchase of insurance. Our advertising stresses that we have two offices, open six days a week with after-hours support and we have been an active, concerned, community involved, local business since 1938.
Still, price is very important and we must work with our markets to ensure that our insurance products are available and affordable to a large part of the market. It is the broker’s job to ensure the client understands what he is buying, and if circumstances dictate a lower-priced product, we must make our insured aware of the trade-off in coverage versus price.
Our trading area is rural. Premiums are relatively low and therefore not subject to large brokerages or specialty direct writers mounting aggressive advertising campaigns to bring in business. There are few group plans providing insurance coverage with the exception of our teachers. Smalltown has two independent brokers and a Co-Operators agent, Nexttown has two independent brokers, and Southtown has one. We have just started to see some move by locals to “Silver Power” and other specialty retailers who advertise on radio and television. The banks are still a future unknown.
We have depended in the past on a small advertisement in our local newspaper, listings in the Yellow Pages, and word of mouth. We must begin to investigate alternate ways to put our name in front of the public.
Our target market is Smalltown District. The ideal client is claims-free aged between 45 – 75 who owns his own home and car and is debt free. Has exhibited stable family patterns and is known and respected in the community.
A similar profile should be used for commercial prospects with emphasis placed on the well-run, profitable business that has exhibited good claims experience.
Our customers are especially sensitive to value. We must ensure that our price and service are perceived to be good value to our client.
Our markets must offer several payment options to our clients that are convenient to the client, not just to the company. Example – payment on insured’s preferred day of month, not on the company’s, and accepting payment by credit or debit card. Many insureds are on a fixed income and receive their income on a set day of each month or a paycheck on a particular day.
We encourage our companies to “Target Market.” Many of our companies are now focusing on what they have perceived to be profitable niche markets, where they can offer a competitive product with little, if any, competition.
We are seeing our commercial markets now moving toward basic coverage and limiting the “bells and whistles,” all-risk products available to only those clients who have modern, well-managed, profitable, low-risk operations. This should help stabilize pricing and, even more important, ensure that there is an insurance market available for most risks. Continued insistence by the industry on better protection, i.e. fire and burglar alarms, upgrading of buildings, etc., have started to lower loss ratios.
Many of the larger insurance markets have increased minimum premiums to $1,000 for any commercial package policy. Our Lloyds market should be able to accommodate these customers with a minimum premium of approximately $600.
We want to emphasize the benefit of dealing with professionals who live and work in our client’s area. We know their needs and their problems and we have a local reputation to protect, unlike an out-of-town market. If the out-of-town broker fails to provide proper cover or advice, they lose one client. We could stand to lose many if the public perceives a professional failure on our part.
Competitive prices for our identified target markets. Discounts of up to 25% for claims-free seniors who renew their home insurance with us.
Careful inspection and the judicious use of deductibles and warranties for insureds using wood stoves should help alleviate company concerns about solid fuel heating devices. Competitive pricing is not an important factor to attract business because competition is very limited for primary wood heat houses in our area. This may provide a chance to pick up all of the insured’s business because, in many instances, they contact us after being told by their previous broker that, in spite of their claims-free status, the broker doesn’t want their house insurance.
Business partners provide us the opportunity to sell lower-priced, basic insurance coverage to our client. Many clients have expressed interest in retaining part or all of the insurance risk, especially for burglary. They feel that if they have installed central alarms and bars, they can take the chance of self insurance.
We are investigating sales incentives for our producers. They must encourage profitable new business and have a retention component. Presently, our producers receive $10 for every new policy written in our office, with the exception of recreational vehicles.
The following table and related charts show our present sales forecast. We are projecting sales to grow at a moderate but steady pace for the coming year and to continue into 1997.
Sales Forecast | |||
1996 | 1997 | 1998 | |
Sales | |||
Sales | $677,600 | $700,000 | $750,000 |
Other | $0 | $0 | $0 |
Total Sales | $677,600 | $700,000 | $750,000 |
Direct Cost of Sales | 1996 | 1997 | 1998 |
Sales | $0 | $0 | $0 |
Other | $0 | $0 | $0 |
Subtotal Direct Cost of Sales | $0 | $0 | $0 |
Some of our present companies have surveyed us to investigate co-operative advertising but we have not committed to any programs at present.
Acme Insurance is really a group of small brokerages housed under one name and location. Our producers are each responsible for a book of business. They sell, service, handle claims and are responsible for their accounts receivable. We have found over the years that our clients prefer to deal with one broker who is aware of their particular needs.
We have listed our plan milestones in the table below.
Milestones | |||||
Milestone | Start Date | End Date | Budget | Manager | Department |
Select Seniors | 1/1/1996 | 12/31/1996 | $0 | P. Smith | Sales |
Broker Acquisition Course | 4/17/1996 | 9/9/1996 | $250 | P. Smith | Finance |
Company Contacts | 1/3/1996 | 12/31/1996 | $1,000 | P. Smith | Marketing |
Install Release 74 | 4/8/1996 | 7/8/1996 | $0 | J. Smith | Staff |
Release 74 Training | 4/2/1996 | 8/2/1996 | $300 | Staff | Staff |
Jason – CAIB Course 2 | 5/4/1996 | 6/24/1996 | $395 | J. Smith | Staff |
Upload/download Training | 1/7/1996 | 3/1/1996 | $1,000 | J. Smith | Staff |
Stephen – Remove Restriction | 1/9/1996 | 1/10/1996 | $400 | Staff | Staff |
Mandatory Staff – 3hr | 1/10/1996 | 1/10/1996 | $1,000 | P. Smith | Management |
Totals | $4,345 |
Management summary management summary will include information about who's on your team and why they're the right people for the job, as well as your future hiring plans.">.
Acme Insurance is slow to hire new people and loyal to those whom we have hired. We hire only when there is a vacancy or growth dictates more staff. Most of our people have been in our organization over 15 years, which allows our clients and our companies to form long lasting business relationships with their broker.
Our brokerage is divided by client instead of service. Each broker is responsible not only to renew and service a client’s insurance, they also are responsible for collection and claims. We feel a client wants to deal with his or her broker, especially in a claim situation, instead of an unknown “specialist” whom they feel does not represent their interests.
Sales Forecast | |||||||||||||
Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | ||
Sales | |||||||||||||
Sales | 0% | $54,000 | $28,500 | $44,500 | $45,000 | $57,000 | $65,000 | $67,000 | $65,000 | $70,000 | $80,000 | $55,000 | $46,600 |
Other | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Sales | $54,000 | $28,500 | $44,500 | $45,000 | $57,000 | $65,000 | $67,000 | $65,000 | $70,000 | $80,000 | $55,000 | $46,600 | |
Direct Cost of Sales | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | |
Sales | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Direct Cost of Sales | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Personnel Plan | |||||||||||||
Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | ||
Name or Title or Group | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Name or Title or Group | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Name or Title or Group | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total People | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
Total Payroll | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Pro Forma Profit and Loss | |||||||||||||
Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | ||
Sales | $54,000 | $28,500 | $44,500 | $45,000 | $57,000 | $65,000 | $67,000 | $65,000 | $70,000 | $80,000 | $55,000 | $46,600 | |
Direct Cost of Sales | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Other Costs of Sales | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Cost of Sales | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Gross Margin | $54,000 | $28,500 | $44,500 | $45,000 | $57,000 | $65,000 | $67,000 | $65,000 | $70,000 | $80,000 | $55,000 | $46,600 | |
Gross Margin % | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | |
Expenses | |||||||||||||
Payroll | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Marketing/Promotion | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Depreciation | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Rent | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Utilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Insurance | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Payroll Taxes | 15% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Operating Expenses | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Profit Before Interest and Taxes | $54,000 | $28,500 | $44,500 | $45,000 | $57,000 | $65,000 | $67,000 | $65,000 | $70,000 | $80,000 | $55,000 | $46,600 | |
EBITDA | $54,000 | $28,500 | $44,500 | $45,000 | $57,000 | $65,000 | $67,000 | $65,000 | $70,000 | $80,000 | $55,000 | $46,600 | |
Interest Expense | $3,767 | $3,767 | $3,767 | $3,767 | $3,767 | $3,767 | $3,767 | $3,767 | $3,767 | $3,767 | $3,767 | $3,767 | |
Taxes Incurred | $15,070 | $7,420 | $12,220 | $12,370 | $15,970 | $18,370 | $18,970 | $18,370 | $19,870 | $22,870 | $15,370 | $12,850 | |
Net Profit | $35,163 | $17,313 | $28,513 | $28,863 | $37,263 | $42,863 | $44,263 | $42,863 | $46,363 | $53,363 | $35,863 | $29,983 | |
Net Profit/Sales | 65.12% | 60.75% | 64.07% | 64.14% | 65.37% | 65.94% | 66.06% | 65.94% | 66.23% | 66.70% | 65.21% | 64.34% |
Pro Forma Cash Flow | |||||||||||||
Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | ||
Cash Received | |||||||||||||
Cash from Operations | |||||||||||||
Cash Sales | $13,500 | $7,125 | $11,125 | $11,250 | $14,250 | $16,250 | $16,750 | $16,250 | $17,500 | $20,000 | $13,750 | $11,650 | |
Cash from Receivables | $127,970 | $129,320 | $39,863 | $21,775 | $33,388 | $34,050 | $42,950 | $48,800 | $50,200 | $48,875 | $52,750 | $59,375 | |
Subtotal Cash from Operations | $141,470 | $136,445 | $50,988 | $33,025 | $47,638 | $50,300 | $59,700 | $65,050 | $67,700 | $68,875 | $66,500 | $71,025 | |
Additional Cash Received | |||||||||||||
Sales Tax, VAT, HST/GST Received | 0.00% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Investment Received | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Received | $141,470 | $136,445 | $50,988 | $33,025 | $47,638 | $50,300 | $59,700 | $65,050 | $67,700 | $68,875 | $66,500 | $71,025 | |
Expenditures | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | |
Expenditures from Operations | |||||||||||||
Cash Spending | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Bill Payments | $336,628 | $18,582 | $11,347 | $15,992 | $16,257 | $19,817 | $22,157 | $22,717 | $22,187 | $23,737 | $26,387 | $19,053 | |
Subtotal Spent on Operations | $336,628 | $18,582 | $11,347 | $15,992 | $16,257 | $19,817 | $22,157 | $22,717 | $22,187 | $23,737 | $26,387 | $19,053 | |
Additional Cash Spent | |||||||||||||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Principal Repayment of Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Long-term Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Purchase Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Purchase Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Dividends | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Spent | $336,628 | $18,582 | $11,347 | $15,992 | $16,257 | $19,817 | $22,157 | $22,717 | $22,187 | $23,737 | $26,387 | $19,053 | |
Net Cash Flow | ($195,158) | $117,863 | $39,641 | $17,033 | $31,381 | $30,483 | $37,543 | $42,333 | $45,513 | $45,138 | $40,113 | $51,972 | |
Cash Balance | $207,482 | $325,345 | $364,986 | $382,019 | $413,400 | $443,883 | $481,426 | $523,759 | $569,272 | $614,410 | $654,523 | $706,495 |
Pro Forma Balance Sheet | |||||||||||||
Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | ||
Assets | Starting Balances | ||||||||||||
Current Assets | |||||||||||||
Cash | $402,640 | $207,482 | $325,345 | $364,986 | $382,019 | $413,400 | $443,883 | $481,426 | $523,759 | $569,272 | $614,410 | $654,523 | $706,495 |
Accounts Receivable | $255,940 | $168,470 | $60,525 | $54,038 | $66,013 | $75,375 | $90,075 | $97,375 | $97,325 | $99,625 | $110,750 | $99,250 | $74,825 |
Other Current Assets | $309,137 | $309,137 | $309,137 | $309,137 | $309,137 | $309,137 | $309,137 | $309,137 | $309,137 | $309,137 | $309,137 | $309,137 | $309,137 |
Total Current Assets | $967,717 | $685,089 | $695,007 | $728,160 | $757,168 | $797,912 | $843,095 | $887,938 | $930,221 | $978,034 | $1,034,297 | $1,062,910 | $1,090,457 |
Long-term Assets | |||||||||||||
Long-term Assets | $465,575 | $465,575 | $465,575 | $465,575 | $465,575 | $465,575 | $465,575 | $465,575 | $465,575 | $465,575 | $465,575 | $465,575 | $465,575 |
Accumulated Depreciation | $181,651 | $181,651 | $181,651 | $181,651 | $181,651 | $181,651 | $181,651 | $181,651 | $181,651 | $181,651 | $181,651 | $181,651 | $181,651 |
Total Long-term Assets | $283,924 | $283,924 | $283,924 | $283,924 | $283,924 | $283,924 | $283,924 | $283,924 | $283,924 | $283,924 | $283,924 | $283,924 | $283,924 |
Total Assets | $1,251,641 | $969,013 | $978,931 | $1,012,084 | $1,041,092 | $1,081,836 | $1,127,019 | $1,171,862 | $1,214,145 | $1,261,958 | $1,318,221 | $1,346,834 | $1,374,381 |
Liabilities and Capital | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | |
Current Liabilities | |||||||||||||
Accounts Payable | $336,000 | $18,209 | $10,814 | $15,454 | $15,599 | $19,079 | $21,399 | $21,979 | $21,399 | $22,849 | $25,749 | $18,499 | $16,063 |
Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Other Current Liabilities | $100,362 | $100,362 | $100,362 | $100,362 | $100,362 | $100,362 | $100,362 | $100,362 | $100,362 | $100,362 | $100,362 | $100,362 | $100,362 |
Subtotal Current Liabilities | $436,362 | $118,571 | $111,176 | $115,816 | $115,961 | $119,441 | $121,761 | $122,341 | $121,761 | $123,211 | $126,111 | $118,861 | $116,425 |
Long-term Liabilities | $452,036 | $452,036 | $452,036 | $452,036 | $452,036 | $452,036 | $452,036 | $452,036 | $452,036 | $452,036 | $452,036 | $452,036 | $452,036 |
Total Liabilities | $888,398 | $570,607 | $563,212 | $567,852 | $567,997 | $571,477 | $573,797 | $574,377 | $573,797 | $575,247 | $578,147 | $570,897 | $568,461 |
Paid-in Capital | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 | $100 |
Retained Earnings | $88,096 | $363,143 | $363,143 | $363,143 | $363,143 | $363,143 | $363,143 | $363,143 | $363,143 | $363,143 | $363,143 | $363,143 | $363,143 |
Earnings | $275,047 | $35,163 | $52,476 | $80,989 | $109,852 | $147,116 | $189,979 | $234,242 | $277,105 | $323,468 | $376,831 | $412,694 | $442,677 |
Total Capital | $363,243 | $398,406 | $415,719 | $444,232 | $473,095 | $510,359 | $553,222 | $597,485 | $640,348 | $686,711 | $740,074 | $775,937 | $805,920 |
Total Liabilities and Capital | $1,251,641 | $969,013 | $978,931 | $1,012,084 | $1,041,092 | $1,081,836 | $1,127,019 | $1,171,862 | $1,214,145 | $1,261,958 | $1,318,221 | $1,346,834 | $1,374,381 |
Net Worth | $363,243 | $398,406 | $415,719 | $444,232 | $473,095 | $510,359 | $553,222 | $597,485 | $640,348 | $686,711 | $740,074 | $775,937 | $805,920 |
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FinDev Gateway hosts the largest, free collection of online resources on microfinance and financial inclusion. Explore over 8,000 publications, trainings, events, jobs and announcements which have been curated by our editors and submitted by a wide range of organizations from around the world.
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This guide provides information on how to prepare a microinsurance business plan.
Poor households are particularly vulnerable to catastrophic financial ruin because of their limited resources. Industry experts increasingly believe that microinsurance can assist the poor in managing insurable risks. Microinsurance products and programs have grown rapidly in recent years, in response to growing demand. Many of these are set up without the benefits of a thorough business planning exercise.
The guide targets readers who want to start a microinsurance business, especially those who have not yet developed a systematic plan on existing microinsurance operations. It walks readers through important components of a microinsurance business plan and discusses topics that readers should reflect upon during the planning process. The guide includes topics on:
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After their session at European Microfinance Week, Katharine Pulvermacher and Stewart McCulloch discuss challenges and new models for making agricultural insurance more accessible.
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This paper identifies five ways in which data trails are being leveraged by private sector actors, including insurance carriers and technology providers, to offer “inclusive insurance” for low-income and other excluded segments, such as rural small-holder farmers and gig workers.
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By United Nations Capital Development Fund (UNCDF)
Written by Dave Lavinsky
Over the past 20+ years, we have helped over 3,000 entrepreneurs and business owners create business plans to start and grow their insurance agencies. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through an insurance agency business plan template step-by-step so you can create your plan today.
Download our Ultimate Insurance Business Plan Template here >
A business plan provides a snapshot of your insurance agency as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.
If you’re looking to start an insurance agency or grow your existing insurance agency you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your insurance agency in order to improve your chances of success. Your insurance agency business plan is a living document that should be updated annually as your agency grows and changes.
With regards to funding, the main sources of funding for an insurance agency are personal savings, credit cards, bank loans, and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable. But they will want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate the business.
The second most common form of funding for an insurance agency is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding, or, like a bank, they will give you a loan. Venture capitalists will not fund an insurance agency unless it is based on a unique, scalable technology.
How to write a business plan for an insurance agency.
Your insurance agency business plan should include 10 sections as follows:
Customer analysis, competitive analysis, marketing plan, operations plan, management team, financial plan.
Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of insurance agency you are operating and the status; for example, are you a startup, do you have an insurance agency that you would like to grow, or are you operating multiple insurance agency locations already.
Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the insurance agency industry. Discuss the type of insurance agency you are operating. Detail your direct competitors. Give an overview of your target market. Provide a snapshot of your marketing strategy. Identify the key members of your team. And offer an overview of your financial plan.
In your company analysis, you will detail the type of insurance business you are operating.
For example, you might operate one of the following types:
In addition to explaining the type of insurance agency you operate, the Company Analysis section of your own business plan needs to provide background on the business.
Include answers to question such as:
In your industry analysis, you need to provide an overview of the insurance business.
While this may seem unnecessary, it serves multiple purposes.
First, researching the insurance industry educates you. It helps you understand the market in which you are operating.
Secondly, market research can improve your strategy particularly if your research identifies market trends. For example, if there was a trend towards weather-related policy purchases, it would be helpful to ensure your plans call for flood insurance options.
The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section of your insurance company business plan:
The customer analysis section of your insurance agency business plan must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: individuals, households, businesses, etc.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of insurance agency you operate. Clearly baby boomers would want different pricing and product options, and would respond to different marketing promotions than recent college graduates.
Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve. Because most insurance businesses primarily serve customers living in their same geographic region, such demographic information is easy to find on government websites.
Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.
Don’t you wish there was a faster, easier way to finish your business plan?
With Growthink’s Ultimate Insurance Business Plan Template you can finish your plan in just 8 hours or less!
Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.
Direct competitors are other insurance agencies.
Indirect competitors are other options that customers have to purchase from you that aren’t direct competitors. This includes self pay and public (Medicare, Medicaid in the case of health insurance) insurance or directly working with an insurance carrier. You need to mention such competition to show you understand that not everyone who purchases insurance does so through an insurance agency.
With regards to direct competition, you want to detail the other insurance agencies with which you compete. Most likely, your direct competitors will be insurance agencies located in your geographic region.
For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:
With regards to the last two questions, think about your answers from the customers’ perspective.
The final part of your competitive analysis section is to document your areas of competitive advantage. For example:
Think about ways you will outperform your competition and document them in this section of your plan.
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For an insurance agency, your marketing plan should include the following:
Product : in the product section you should reiterate the type of insurance agency that you documented in your Company Analysis. Then, detail the specific products/services you will be offering. For example, in addition to P&C insurance, will you also offer life insurance?
Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the menu items you offer and their prices.
Place : Place refers to the location of your insurance agency. Document your location and mention how the location will impact your success. For example, is your insurance agency located next to the Department of Motor Vehicles, or a heavily populated office building, etc. Discuss how your location might provide a steady stream of customers.
Promotions : the final part of your insurance agency marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your insurance agency such as serving customers, procuring relationships with insurance carriers, negotiating with repair shops, etc.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to acquire your 500th customer, or when you hope to reach $X in sales. It could also be when you expect to hire your Xth employee or launch a new location.
To demonstrate your insurance agency’s ability to succeed as a business, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally you and/or your team members have direct experience in an insurance agency. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in insurance agencies and/or successfully running small businesses.
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.
Income Statement : an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will you acquire 20 new customers per month or 50? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Balance Sheets : While balance sheets include much information, to simplify them to the key items you need to know about, balance sheets show your assets and liabilities. For instance, if you spend $100,000 on building out your insurance agency location and/or website, that will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $100.000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Cash Flow Statement : Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money.
In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a successful insurance agency:
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your store design blueprint or location lease.
You can download our insurance business plan PDF .
Putting together a business plan for your insurance business will improve your company’s chances of success. The process of developing your plan will help you better understand the insurance market, your competition, and your customers. You will also gain a marketing plan to better attract and serve customers, an operations plan to focus your efforts, and financial projections that give you goals to strive for and keep your company focused.
Growthink’s Ultimate Insurance Business Plan Template allows you to quickly and easily complete your Insurance Business Plan.
Don’t you wish there was a faster, easier way to finish your Insurance business plan?
Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success. Click here to learn about Growthink’s business plan writing services .
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NEXT wins with low-cost coverage and an easy application process
With small business, you never know when certain kinds of crises could hit. Will a customer sue your business? Will a natural disaster wipe out your facilities? A good small business policy could save you thousands of dollars or more if you ever face such unhappy circumstances.
After extensive research, our experts found that Next is the best business insurance company overall because it offers a wide range of policy types and an easy online application process that lets you sign up in about 10 minutes.
To choose the best commercial insurance companies for small businesses, we evaluated 19 national and regional insurers on 53 criteria in the following categories: cost, quote and application experience, customer satisfaction, coverage, accessibility, and financial stability.
Use an insurance marketplace like Insureon to get matched to the best provider for your business.
Huckleberry
The Hartford
What is small business insurance.
Why trust our expert small business insurance reviews.
Best overall : next.
Next Insurance
Next provides a way to get a wide range of affordable business insurance coverages entirely online in about 10 minutes. But you also have the option of speaking with a U.S.-based advisor in your area.
Offers a live certificate of insurance for easy sharing
Allows you to customize your business insurance policy with a variety of coverages
100% online quote and application with assistance available
Fewer specialized coverages than some other companies
Next offers a wide array of commercial insurance coverage types, which can be purchased online for same-day coverage. Next offers a business owner’s policy (general liability insurance and commercial property insurance), commercial auto insurance, workers' compensation coverage, professional liability insurance, tools & equipment insurance, and more.
The company also offers a variety of digital policy management tools, including the ability to share a live certificate of insurance and quickly add an additional insured, free of charge. Monthly payments are available, and eligible customers can save up to 25% with discounts.
Next Insurance has an A- (Excellent) financial strength rating with AM Best. However, other companies offer more enhancements and specialized coverages.
Based in Palo Alto, California, Next was founded in 2016 and uses artificial intelligence and machine learning to streamline the insurance buying process. In November 2023, it raised $265 million in funding from Allstate and Allianz X—one of the largest rounds of funding raised in the insuretech industry that year, according to Crunchbase. The deals include a strategic partnership with Allstate to develop new commercial auto insurance products.
Hiscox offers several solutions for freelancers that make the company our top pick for the best independent contractor insurance among small commercial insurance providers.
Customization options for independent contractors
Monthly payments with no fees
Offers short-term liability insurance for business
Higher than expected number of complaints with the NAIC
Hiscox offers a straightforward business owner’s policy (BOP) that can be customized with business interruption insurance, electronic data loss insurance, professional liability insurance, and more.
You can also choose standalone policies for professional liability and general liability insurance, and you can get either coverage on demand for short-term projects. Plus, Hiscox allows you to pay for your business insurance policy in monthly payments, which can help freelancers better manage their cash flow.
Hiscox has an A (Excellent) rating with AM Best, indicating excellent financial strength; however, the company received somewhat more complaints than expected over the last three years given its size. This indicates that Hiscox may have issues with customer satisfaction, although the company did receive fewer complaints each year, indicating improvement. BOPs start at around $500 per year.
You can get a business insurance quote online or speak with an agent by phone. You can also file claims online or by phone. Claims services can be accessed online 24/7.
With roots dating back to 1901, Hiscox USA is based in Atlanta. It is part of the Hiscox Group, an international company with more than 3.000 employees.
Huckleberry offers a suite of essential restaurant insurance and food business insurance coverages that are suitable for brick-and-mortar restaurants, caterers, food trucks, and more.
BOP policies underwritten by Markel and Chubb
100% online quote and application
Wide range of customization options
Doesn’t offer employee benefits packages
Huckleberry, which is a broker that works with Chubb and Markel for its BOP policies, offers a restaurant endorsement as an add-on to its business owner’s policy. It’s a bundle of food-specific coverages that includes spoilage coverage, food contamination insurance, and ordinance or law equipment coverage, among others. Plus, you can add workers' comp, commercial auto, and liquor liability coverage to customize your business insurance policy as needed.
Most policies are underwritten by Markel or Chubb. Both companies have excellent financial strength ratings from AM Best. Like Next Insurance, Huckleberry offers an entirely online quote and application process that allows you to get coverage for your small business quickly. And you can get a certificate of insurance online to share with clients in less than a minute.
Huckleberry’s BOP includes general liability, commercial property, and business interruption insurance at a reasonable price. For example, a BOP for a food truck starts at $42 per month.
Founded in 2017 in San Francisco, Huckleberry is now owned by payroll company Paychex, which operates the Paychex Insurance Agency.
biBERK has an A++ (Superior) financial strength rating from AM Best, the highest rating available, offers a wide range of industry-specific coverages, and is backed by Berkshire Hathaway.
Backed by Berkshire Hathaway Group
Online quote and application
Excellent customer service reviews
Dozens of endorsements to enhance a BOP
Doesn’t offer group employee benefits
biBERK Business Insurance is part of Berkshire Hathaway Group, which has decades of experience in the commercial insurance industry. BiBerk’s underwriters are all rated A++ (Superior) by AM Best, indicating a superior ability to meet financial obligations to policyholders.
What’s more, you can get a quote and apply to receive coverage instantly, entirely online. Policyholders have great things to say about the service and coverage on third-party websites.
biBERK can meet the needs of most small businesses, offering many commercial insurance options, such as business owner’s policies, commercial auto insurance, workers' compensation insurance , umbrella insurance, professional liability insurance, and general liability policies. You can add risk-specific endorsements and industry endorsements to your business owner’s policy, such as liquor liability and cyber liability coverage as well. BiBerk BOPs start at about $500 per year.
BiBerk was founded in 2015 and is based in Omaha, Nebraska.
Thimble Insurance
Thimble offers on-demand policies for general liability insurance starting at $17 per month.
Offers monthly and on-demand coverage options
Liability policies start at $17 per month
Offers event insurance
Occurrence-based policies
Excellent reviews on Trustpilot
Doesn’t offer commercial auto insurance
Thimble is a great option for small businesses that need quick, temporary, affordable small business insurance, particularly those looking to purchase coverage for an event or on an on-demand basis. The company’s business owner’s policy includes general liability, commercial property insurance, and business interruption insurance, and you can also add professional liability, workers' compensation, and business equipment protection.
Customers on Trustpilot have great things to say about the ease of the application process. You can get a quote and purchase coverage online or in the app. Several reviews also pointed out that Thimble’s customer service team was communicative and responded quickly.
Thimble works with several different insurance companies, each of which has an AM Best rating of at least A- (Excellent). Thimble policies are occurrence-based , which provides more robust coverage than claims-made policies. You’re covered for incidents that occurred while your business insurance policy was in force, even if you’ve since canceled it.
Thimble, which has been selling small business insurance coverage since 2018, was bought by Arch Insurance in April 2023. Thimble is based in New York City.
As one of the largest providers of workers' compensation insurance in the country, The Hartford has a huge provider network and pay-as-you-go billing that helps you avoid overpaying.
Pay-as-you-go billing options
Access to a network of over 1 million providers
2nd-highest financial strength rating
Start claims online
Poor J.D. Power ranking
The Hartford is a top pick among small business insurance providers for the best workers' compensation insurance . The company provides a large network of doctors and nurse case managers to help your employees get healthy, and pay-as-you-go billing options.
When you choose to pay as you go, your premiums are based on actual payroll rather than estimates, which prevents overpayment. The Hartford also allows you to easily start a claim online. What's more, the company uses data analytics to provide injured workers with a toolkit to aid in faster recovery.
The insurer has an A+ (Superior) financial strength rating from AM Best; however, the company was ranked below average in the J.D. Power 2023 U.S. Small Commercial Insurance Study.
The Harford is based in Hartford, Connecticut, and was founded in 1810.
Chubb is ideal for larger small businesses because it supports businesses with revenue up to $30 million and offers a very wide range of coverage options.
Supports businesses with up to $30 million in revenue
Few complaints relative to Chubb’s market share
Highest financial strength rating
Many enhancements to customize a BOP
Must speak with an insurance agent to start your business insurance policy
Chubb is one of the largest carriers (by annual premiums) of commercial insurance and has a well-regarded small business owner's policy. The company has relatively high revenue limits for its small commercial business owner's policies and offers a wide array of customized endorsements for a broad range of industries.
You can enhance your business owner’s policy with electronic data liability coverage, professional liability insurance, a variety of property add-ons, crime coverage, equipment breakdown coverage , earthquake coverage (in certain states), and more. Workers' compensation, umbrella, commercial auto, and cyber risk coverages are also available.
Chubb can offer an instant quote, and policies are generated instantly, but you will need to speak with an insurance agent to start your coverage.
Chubb has an A++ (Superior) financial strength rating from AM Best and is ranked second for customer satisfaction in the J.D. Power 2023 U.S. Small Commercial Insurance Study.
Chubb Corporation dates its origins back to 1882. Chubb Insurance Group today is based in Warren, New Jersey.
State Farm is one of the top-ranked companies for customer satisfaction in the J.D. Power 2023 U.S. Small Commercial Insurance Study and offers coverage for virtually any industry.
Customizable business owner’s policies with many coverage options
State Farm has been meeting the needs of small businesses since 1935 and has superior ratings. The company has an B financial strength rating with AM Best .
It's also ranked second in the J.D. Power 2023 U.S. Small Commercial Insurance Study. NAIC data reveals that State Farm has had just slightly fewer complaints than expected for its commercial liability policies. But, you’ll need to talk to an insurance agent to get coverage. Some business owners may prefer handling the entire transaction online.
The company’s BOP covers commercial property insurance and general liability insurance, plus loss of income, equipment breakdown, and money and securities protection at no extra charge.
You can add professional liability to the package as well. In addition, you can get commercial auto coverage, workers' compensation insurance, and many more coverages. You can also work with State Farm to provide benefits for your employees, such as group life, disability, and health insurance.
State Farm was founded in 1922 in Bloomington, Illinois.
Business Insurance Overall | A- | $8 million | Yes | |
Independent Contractors | A | $5 million | Yes | |
Restaurants | A++, A* | None | Yes | |
Financial Stability | A++ | None | Yes | |
Budget Coverage | A- through A+** | Not disclosed | Yes | |
Workers' Comp | A+ | $50 million | No | |
Larger Small Businesses | A++ | $30 million | No | |
Customer Satisfaction | B | Not disclosed | No |
The size of your small business may dictate the type of business insurance you need and which insurance company is best for you. For a low-cost BOP and quick online coverage, compare quotes from Next, Huckleberry, and BiBerk. Independent contractors and event workers will be best served by Hiscox or Thimble. Consider The Hartford and BiBerk if you’re most concerned with workers' compensation. If you need extensive coverage, including an employee benefits package, you’ll be best served by companies like State Farm and Chubb.
Keep in mind that you may have specialized coverage needs for your industry that a standard business owner’s policy doesn’t include. Some companies offer more enhancements than others. When narrowing down your options, ensure you choose a provider that protects your business from common risks in your industry.
Business insurance, sometimes called commercial insurance, covers your business's assets and income in case of unexpected events during normal business operations, such as lawsuits, natural disasters, or accidents. There are many types of business insurance products, including coverage for property damage, legal liability, and employee-related risks, among others. A business owner's policy (BOP) includes general liability coverage, business property coverage, and business interruption coverage.
You may also want to add other kinds of coverage such as for commercial cars, errors and omissions, and key employees.
Any business | If consumers, vendors, or other people outside your company claim your business harmed them or their property | |
Businesses that own or rent a property, or have equipment or records to protect | If a natural disaster harms your property or a thief steals your property | |
Any business that depends on its property to generate income | If your business loses revenue because your property is damaged | |
Lawyers, doctors, accounts, and others who provide services based on specialized expertise | If a customer accuses you of negligence, malpractice, mistakes, or misrepresentation | |
Businesses with employees. Most states require it | If a worker is injured on the job | |
Businesses with employees | If a worker alleges discrimination, harassment, wrongful termination, or other unfair employment practices | |
Businesses that sell products | If someone claims your defective product caused bodily harm or injuries | |
Businesses that use vehicles for operations or business owners who use their personal car for business | If you or an employee are in a car accident while working or using a company car | |
Businesses with high liability risks like lots of foot traffic, and those that could be hit with very expensive lawsuits. Often required for government contracts | If a big unexpected event happens that causes damages beyond what your other insurance covers | |
Businesses that virtually interact with customers and accept electronic payments | If your business is hacked or suffers a data breach |
To learn more, read our article on types of business insurance .
Protects company assets
Safeguards employees
May fulfill legal or contractual obligations
May boost the company’s reputation
Exclusions, limitations, and availability issues
Documentation requirements
Adjustment and payment delays
Investopedia's research into six insurers found that some insurers offer more affordable coverage than others, so you should gather quotes from at least three companies before you buy small business insurance. In general, a business owner's policy starts at $300 to $500 a year. The lowest premiums for professional liability also ranged from $300 to $500, and premiums for general liability insurance started at $200 to $400.
Business Owner’s Policy (BOP) | $300 to $500 |
Professional Liability | $300 to $500 |
General Liability | $200 to $381 |
The price of a commercial insurance policy depends on several factors:
Whether your business needs insurance depends on the nature and size of your operations and the laws in your state. Most businesses need general liability insurance to protect themselves from third-party bodily injury or property damage claims. You should consider buying liability coverage if you manufacture or sell products, invite customers to your premises, or provide services at customers’ locations.
If your business owns buildings or other property that you use in your operations, you should consider buying property insurance. A commercial property policy protects your business against physical damage to property by a fire or other covered peril. It may also cover income you lose as a result of the physical damage.
Do you use cars or trucks in your business? If so, state law may require you to buy auto liability insurance . You’ll need to insure the vehicles under a commercial (not personal) auto policy. If you employ workers, state laws may require you to buy workers’ compensation insurance . And if your business involves offering advice or providing a professional service, you should consider buying professional liability insurance . Also called errors and omissions insurance , professional liability insurance covers third-party claims against your business for financial losses resulting from malpractice, errors, or mistakes you allegedly made while performing a professional service.
While the cost of insurance for a small business may seem high, the cost of a big lawsuit could dwarf those expenses. So be sure to weigh those risks when deciding whether you need coverage or not.
“If you’ve just started a business and are wondering about insurance, don’t assume your homeowners or renter’s policy will cover your business activities. Check with your insurer. If you employ workers, you’ll probably need to buy workers' compensation insurance. You should also consider general liability insurance, which protects your business from claims involving slip-and-falls and other common workplace accidents. As your business grows and accumulates assets, you may need additional coverages like commercial property and business auto insurance.”
— Marianne Bonner , Investopedia insurance expert, consultant, and former commercial insurance underwriter
Here’s a step-by-step process for choosing the best insurance company for your small business:
Some California businesses have been struggling since insurers began pulling out of the state as the cost of providing coverage there has increased. State Farm said in May 2024 that it would stop issuing new policies for business property casualty insurance in California “due to historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market.” Allstate gave similar reasons in public statements.
But Farmers Insurance said on May 14 that it will resume accepting new business commercial multi-peril applications for auto service and repair, habitational, manufacturing, real estate, and wholesale distribution policies in California, starting August 1, 2024. It also announced earlier that it would lift its temporary moratorium on writing new commercial automobile insurance policies in the state, effective July 1, 2024.
Investopedia launched in 1999, and has been helping readers find the best small business insurance since 2020. We conduct extensive research to provide unbiased, comprehensive reviews to ensure you make the right decisions for your needs.
Is business insurance required.
Generally, business insurance is optional unless it’s required by state law or the terms of a contract. For example, many states require workers’ compensation insurance or auto liability insurance if your company owns vehicles you use for business. Or a business contract you sign may require certain insurance. Say you own an electrical contracting business. You sign a deal with a general contractor in which you agree to install electrical panels in a building the contractor is constructing. The contract requires you to have general liability, auto liability, and workers' compensation insurance in place before you begin any work.
A business owner’s policy includes general liability insurance, commercial property insurance, and, often, business interruption insurance. General liability insurance covers lawsuits when your business is responsible for harming a third party. Commercial property insurance covers damage to your building. Business interruption insurance helps replace business income after a covered loss.
Small business insurance excludes anything that you don’t specifically buy coverage for. For example, if you buy a business owner’s policy, but it doesn’t specifically include business personal property coverage, you won’t get coverage for the items inside your office or warehouse after a loss. There are also some disasters that are not typically covered. For example, you’ll need an endorsement to cover earthquakes and flooding. Certain catastrophic events, like war, won’t be covered at all. Commercial policies also won’t cover a loss if it’s covered by another policy.
If you have a home-based business, you still may need business insurance. Your homeowners policy may not be enough to cover your business equipment, inventory, or data, so you may need a separate business property insurance policy. You'll also want a liability policy if you're sued for damages caused by your products, services, or advice. And you may need business interruption insurance to cover losses from a natural disaster, theft, or equipment breakdown. Finally, if you have remote employees, you may need employers' liability insurance to cover you if they get injured, sick, or die because of their work.
Yes, you need business insurance to protect your limited liability company (LLC) from lawsuits and property losses. Your personal assets are protected from lawsuits against your LLC, but that protection doesn’t extend to the LLC itself. Suppose a customer is injured at your business premises and sues your LLC for compensation. If your business has no liability insurance, it will have to pay legal fees and any damages or settlements awarded by a court.
Your LLC may also be subject to property damage losses if it owns buildings, equipment, or other property that is damaged in a fire, say. Your LLC will have to use company assets to pay for repairs. You can protect your LLC from unexpected losses by purchasing general liability and commercial property insurance.
Umbrella insurance provides extra liability coverage, extending the limits of other policies such as general business liability and commercial auto insurance. It provides an additional layer of security to those who are at risk of being sued for damages to other people's property or injuries caused to others in an accident. It also protects against libel, vandalism, slander, and invasion of privacy.
Small business insurance premiums are generally tax-deductible if the insurance is considered "ordinary and necessary" for your business. This includes premiums for liability, commercial property, malpractice, workers' compensation (when required by law), commercial auto, business interruption, and overhead insurance. Life insurance for officers and employees if you aren't a beneficiary is also deductible. And if you're self-employed, you may be able to deduct premiums for health, dental, and qualified long-term care insurance for you, your spouse, and your dependents.
We researched and reviewed 18 companies to find the best eight companies you see above on this list. The companies that didn't make it to our list didn't score as well as competitors on one or more of our criteria, including measures of quality, cost, coverage, and customer experience.
These are the companies we researched:
NEXT Insurance , Chubb Ltd. , CoverWallet , Thimble , Nationwide , biBerk , Hiscox , AmTrust Financial , Huckleberry , Insureon , The Hartford , Farmers , Geico , Travelers , Progressive , CNA , Liberty Mutual , State Farm
In order to compile our list of the best commercial insurance companies for small businesses, we developed a comprehensive methodology. To identify which companies and criteria to include in our review, we analyzed business and market insight databases, considered commercial insurance company market share, looked at search data from Google, and reviewed company product pages and agents' guides to assess important product features.
With those findings in mind, we spent three months digging up information about 53 features on 19 insurance companies, including ratings for financial strength by AM Best , customer satisfaction rankings in the J.D. Power 2023 U.S. Small Commercial Insurance Study, and individual customer complaints reported to insurance state commissioners and recorded by the NAIC (National Association of Insurance Commissioners) . We also considered nationwide availability; whether an online quote and application are available; and policy-specific features, including claim limits, cost, and coverage exclusions.
The criteria determine how easy it is to procure a small business insurance policy from the company, the quality of that policy relative to its cost, and how likely customers are to be satisfied with the purchase process and their experience as a policyholder. We ranked each company according to the following categories and weights:
Companies that make coverage widely available, have a streamlined quote and application process, offer robust features, and have strong ratings for financial stability and customer satisfaction topped our list. For more information, read our full small business insurance methodology .
Next Insurance. " Business Insurance for 1300+ businesses ."
AM Best. " AM Best Assigns Credit Ratings to Next Insurance US Company ."
Crunchbase. " Small Biz Insurer Next Insurance Raises $265M ."
AM Best. " Hiscox Insurance Company Inc ."
NAIC. “ Hiscox Insurance Company, Inc .”
AM Best. " AM Best Affirms Credit Ratings of Chubb Limited and Its Subsidiaries ."
AM Best. " Markel Insurance Company ."
AM Best. " AM Best Affirms Credit Ratings of Berkshire Hathaway Homestate Insurance Company and Its Affiliates ."
Trustpilot. " biBerk Business Insurance ."
Trustpilot. " Thimble Reviews ."
Thimble. " Insurance Ratings ."
Arch Insurance. " Arch Insurance Acquires Thimble ."
Insurance Information Institute. " Facts + Statistics: Insurance Company Rankings | III ."
J.D. Power. “ 2023 U.S. Small Commercial Insurance Study .”
Chubb. " Business Policy Insurance Policy ."
Insurance Information Institute. " Facts and Statistics: Commercial Lines "
State Farm. " Product Growth ."
Businesswire. " AM Best Affirms Credit Ratings of State Farm Mutual Automobile Insurance Company and Its Subsidiaries ."
NAIC. “ State Farm Fire & Cas Co National Complaint Index Report .”
Insurance Newsnet. " Seeing an Improved Commercial Insurance Marketplace in California, Farmers to Resume Offering Key Lines of Business Insurance ."
IRS. " Publication 535 (2022), Business Expenses ."
How to use ai in the insurance value chain: claims management, enhancing inclusion and diversity to attract and retain today’s talent, agency networks – the new reality in insurance distribution, open insurance unlocks the data treasure trove, insurance blog | accenture other blogs banking blog capital markets blog insurance blog.
Other parts of this series:.
Microinsurance, or small-ticket insurance as it is often called in developed markets, is making significant progress in the industry. From Bolivia to Bangladesh and Nigeria to the Netherlands, millions of people are turning to microinsurance to protect their assets against losses, whether it is for livestock in emerging markets or for pets in mature markets.
Barely two decades have passed since the concept of microinsurance was unveiled as an extension of microfinance. It soon became a credible financial services category in its own right, featuring ultra-low premiums.
Microinsurance is also called inclusive insurance, and for good reason. It offers services to a large segment of society which, until recently, had no access to insurance.
As a sign of its perceived importance, the World Economic Forum has joined forces with industry giants in creating a company that offers services such as crop indemnity coverage to vulnerable farmers in Africa. Blue Marble Microinsurance was unveiled in 2015. The company says its mission is to extend “socially impactful and commercially viable protection to the underserved.”
The International Labour Organization offers grants of up to $500,000 for microinsurance projects in developing countries through its Microinsurance Innovation Facility , which was launched in 2008.
In Puerto Rico, which was devastated by Hurricane Maria last year, legislative efforts are underway to provide coverage to the poor, the first US jurisdiction to do so.
A study published in 2017 by Microinsurance Network and Munich Re Foundation showed that more than 52 million people in Latin America and the Caribbean had at least one microinsurance policy as of December 2016. In Africa, according to the World Map of Microinsurance , close to 62 million people had coverage at the end of 2014.
Mature markets are also witnessing rapid growth in the small-ticket insurance sector, where demand is robust for products such as travel insurance and extended warranties.
Much of this growth has been achieved thanks to evolving technologies. Accenture, as part of our Technology Vision 2018 survey, reached out to more than 6,300 business and IT executives to gauge their views. The respondents included 623 executives from the insurance industry.
The survey of insurers found that 25 percent of those polled have already entered the market, while a further 43 percent believe it has good potential and plan to enter soon.” Just 2 percent found it unattractive.
The study provides a perspective on what insurers are doing now and whether their projects are sustainable in the long-term.
Much of the inspiration for the current state of the market has come from insurtechs, which are leading nothing short of a revolution in the small-ticket industry. Here are some examples:
Cuvva offers one of the most mainstream forms of small-ticket insurance with its pay-as-you-go car insurance in the United Kingdom. Motorists need to buy coverage only when they need it. The all-digital transactions are carried out in under 10 minutes, adding to the popularity of the service.
Lemonade incorporates a peer-to-peer insurance model, which allows policyholders, typically friends, to pool their premiums, thus reducing costs. The New York insurtech’s business model is based in part on behavioral economics.
Based in India, Toffee offers what it calls “bite-sized” insurance for things such as fitness, commuting and backpacking.
Blockchain technology is also being used in the microinsurance business. In the latest such initiative, British charity Oxfam has announced a partnership with Etherisc to offer insurance to rice farmers in Sri Lanka.
In the West African country of Mali, an Israeli startup is doing brisk business selling coverage by simply using an interface based on text messages. OKO ’s pilot project has attracted hundreds of farmers as all transactions are done on mobile devices. As the company is focused on crop insurance, it uses satellite imagery and radar-based technologies to define weather risks with precision.
And in Myanmar, Swiss startup Stonestep is working with an international aid agency to expand microinsurance coverage in the Asian country, with a target of 600,000 customers over the next two years
These examples illustrate the growing geographic and functional diversity of the microinsurance industry. By teaming up with insurtechs or developing disruptive technologies of their own, insurers are gradually expanding the market for their products.
To learn more:
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By silvia milian, how insurers can channel the power of web3, by jim bramblet, insuring the programmable world, discovery – a holistic, ongoing innovation story, by darcy dague, one size does not fit all: new working models should consider job, how insurers can put intelligent digital twins to work, by kenneth saldanha, insurance news: recapping davos and using drones for claims, by ivo weterings, exploring artificial intelligence for insurance, by accenture insurance, key insights from technology vision 2019 for insurance highlighted in 6 charts, 6 key statistics from technology vision 2019 for insurance, get the latest blogs delivered straight to your inbox..
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Fact Checked
Updated: Jul 1, 2024, 5:19am
We analyzed the official complaint records of 28 insurers and found that Allianz and Clear Blue are the best small business insurance companies.
Small business insurance will cover your company from a variety of issues, like workplace injuries, stolen business property, fire, severe weather and lawsuits. But with so many options available, finding the right policy can be challenging. We’ll help you identify the best small business insurance companies to meet your needs.
What are the different types of small business insurance, how do i get the best small business insurance, how much small business insurance coverage do i need.
Other small business insurance companies we rated, best small business insurance frequently asked questions, next insurance.
Tailored policies for thousands of professions
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services aside from microinsurance, the business plan should be a comprehensive one but with a sub-plan for. attention should be given to the variance in actual and projected indicator values. projected key indicator values in the business plan. Later, as Management monitors actual performance, microinsurance.
4. Register and license your business. Before running your business, you'll need to register with your state, typically with the secretary of state's office. Most insurance businesses will ...
A great business plan can guide you through every critical early step of building your company. As you start your insurance company, your plan can help you refine your vision, set objectives, and define the details of your business. Done right, it can help you secure investors, financing, and more. Done poorly or not at all, your new agency may ...
Starting an insurance business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.. 1. Develop An Insurance Business Plan - The first step in starting a business is to create a detailed insurance business plan that outlines all aspects of the venture. This should include potential market size and ...
Micro insurance is the provision of insurance services for people with low income. A vast majority of the poor in developing countries work in the informal or . Micro insurance business models
The executive summary of an insurance company business plan is a one to two page overview of your entire business plan. It should summarize the main points, which will be presented in full in the rest of your business plan. Start with a one-line description of your insurance company. Provide a short summary of the key points in each section of ...
We also provide insurance to small business, mostly family-run seasonal operations primarily focused on the tourist trade. Acme Insurance is a privately incorporated company in the Smalltown district and is licensed to transact both Life and General Insurance. The shares are held equally by John Smith and Peter Smith.
ixth consultation ca. l focused on successful business models in microinsurance. Two calls atended by62 participants from across A. ia, Africa, Latin America and North America were held on Thursday September 25.The calls addre. sed three big questions regarding successful business models in microinsurance. Fir.
Microinsurance: Insurance products that offer coverage to low-income households. A microinsurance plan provides protection to individuals who have little savings and is tailored specifically for ...
Business Planning for Microinsurance. This guide provides information on how to prepare a microinsurance business plan. Poor households are particularly vulnerable to catastrophic financial ruin because of their limited resources. Industry experts increasingly believe that microinsurance can assist the poor in managing insurable risks.
Insurance Agency Business Plan Template. Written by Dave Lavinsky. Over the past 20+ years, we have helped over 3,000 entrepreneurs and business owners create business plans to start and grow their insurance agencies. On this page, we will first give you some background information with regards to the importance of business planning.
About our network About inclusive insurance Annual reports Careers. Our work Events Best practice groups Publications Resources Training. News Network Exchange In the ... This guide describes the main components of a microinsurance business plan and contains all the relevant information that needs to be considered when developing a business ...
Best for Financial Stability: biBERK. Best Budget Coverage: Thimble. Best Workers' Compensation Insurance: The Hartford. Best for Larger Small Businesses: Chubb. Highest Customer Satisfaction ...
Mature markets are also witnessing rapid growth in the small-ticket insurance sector, where demand is robust for products such as travel insurance and extended warranties. ... Accenture, as part of our Technology Vision 2018 survey, reached out to more than 6,300 business and IT executives to gauge their views. The respondents included 623 ...
Business insurance cost. In 2023, the national median cost of business insurance for new Progressive customers ranged from $42 per month for professional liability to $67 per month for workers' compensation. Your cost is based on various factors, including the industry you're in and the specific types of jobs you do.
Chubb: Best online business owner's policy. Next: Best comprehensive online business insurance. Progressive: Best commercial auto insurance. Thimble: Best for short-term coverage. The Hartford ...
Managing Editor, Insurance. Updated: Jul 1, 2024, 5:19am. Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations ...
Common items to include are credit histories, resumes, product pictures, letters of reference, licenses, permits, patents, legal documents, and other contracts. Example traditional business plans. Before you write your business plan, read the following example business plans written by fictional business owners.
Save time and money with Insureon. Complete Insureon's easy online application today to get small business insurance quotes from trusted U.S. insurance companies and receive advice from knowledgeable agents. Once you find the right policy for your small business, you can begin coverage in less than 24 hours. Updated: May 16, 2024.
On average, the cost of small business insurance is about $85 per month and $1,019 per year. 1 Keep in mind that the cost of insurance varies because every small business is different and faces unique risks. What you'll pay depends on different factors, like: The type of insurance you need. Your claims history. What industry you're in.
Steps. 1. Find out what coverage each business insurance company offers. 2. Compare business insurance quotes. 3. Research business insurance discounts. 4. Check customer satisfaction and complaints.
The Hartford Small Business Insurance: Best Liability Insurance For Larger Businesses. Next Business Insurance: Best For Quick Liability Coverage. Nationwide Commercial Insurance: Best For Added Coverage. Hiscox Business Insurance: Best Liability Insurance For Independent Contractors. Thimble: Best For Events Or Occasional Liability Coverage.
The cost of health insurance for a small business per employee is going to depend on the insurance provider, benefits, and type of plan. The average cost for small business owners as of 2021 was $547 per employee and $1,175 for family coverage per month.
Types of small business insurance. ... If the claim is covered, your plan can pay for lawyers and court fees, settlements, judgments and more — up to your policy's limits. Product liability is ...
The vast majority—over 81 percent of 33 million—small businesses in the U.S. have no employees (SBA 2023). Nonemployer small business owners must purchase health insurance for themselves and their families on the individual market if they do not have coverage through another source, such as a family member's plan.
In Ontario, the small business corporate tax rate is only 12.2 per cent on the first $500,000 of active business income compared with personal marginal tax rates as high as 53.53 per cent.
Small business accounting software can help by providing easy-to-use tools for tracking income, generating reports and invoices, and more. The best options are affordable, customizable, and ...
Small business tablet plans. Give your workforce the speed to connect and tools to collaborate on the go with the power of our network and tablet plans. During congestion, heavy data users (>50GB/mo. for most plans) and customers choosing lower-prioritized plans may notice lower speeds than other customers; see plan for details.
Business Insider conducted a travel insurance survey of 971 US adults in December 2023 through Momentive AI Audience. About 80% of those surveyed traveled for non-business reasons in the past year.
Explore the best retirement plans to grow your nest egg and secure a comfortable retirement. Compare 401(k)s, IRAs, and other savings options.