How Is An Insurance Agency Business Plan Formulated?

An insurance agency business plan serves as a roadmap for an insurance agency to use toward success. An insurance agency operates to represent 1 or many insurance companies and provides a place for agents and brokers to access products and information necessary to meet the needs of their insurance clients.

The Business Plan

Most every insurance agency, like any other business, creates a business plan. Business plans are used to obtain financing to setup both the insurance agency and the various functions necessary to operate the agency. The plan is created or formulated based on a look at the management, marketing, distribution and financial channels that are required.


The plan first takes a look at the management team for the agency. This starts with the general agent, in the case of a career insurance agency and an agency manager in a direct or American agency system. The plan also identifies second line managers such as district agents, recruiters, agency supervisors and product managers. Each of these members of the agency management provides an important and essential role in operating the agency. The plan identifies these individuals and provides information about their education, background and position in the management organization.


A marketing plan is designed to show where the insurance agency’s income will be derived from. The marketing plan identifies the sales potential for the agency, based on zip code and other demographic analysis. The marketing plan will show the number of targeted households, businesses and other individuals and entities that represent the potential client base for the agency.

Sales and Distribution

An agency’s distribution channel is essential in order to distribute the products of the agency. The distribution channel refers to the sales and sales management component of the insurance agency business plan. This section addresses the recruitment, training, licensing and management of the agency’s sales staff. This part of the plan is formulated by looking at the models and best practices of similar insurance agencies and applying them accordingly.

Financial Information

Every business provides information on the sales and expense projections as well as a balance sheet for the business. This is no different from an insurance agency business plan. The projected financial statements show how the business will look at certain points 1, 3 and 5 years in the future. The financial plan is developed using assumptions for income growth relative to the projected expenses for the insurance agency. The net result between the income and expenses is the profit. This information is what banks and lenders use to give loans and is also used by insurance agencies when granting a license to the general agency.

Information on sample insurance agency business plans can be found online and through such organizations as the Life Insurance Management and Research Association (LIMRA) or the National Association of Insurance and Financial Advisors (NAIFA).