Entrepreneurs hoping to start a small business with almost assured profitability might consider opening an insurance agency franchise. After all, consumers and companies will always need some type of insurance.
Insurance franchises offer opportunities for any professional with sales or finance experience, as well as anyone who is already a licensed insurance agent. Plenty of successful insurance companies offer franchise partnerships, including expert guidance to help a new franchise grow.
What is an Insurance Franchise?
An insurance franchise operates like most other franchises. The franchise owner is responsible for issuing insurance policies to customers within their assigned area. Top brands in the insurance industry support their franchisees by establishing a protected territory for each insurance agency, ensuring that various locations don’t infringe on one another’s business. Insurance companies also help their franchise owners by providing needed support to establish their business and attract more customers.
- READ MORE: See our Franchise Guide
The Insurance Industry in 2022
The insurance industry encompasses a variety of insurance types, including health insurance, auto insurance, business insurance, life insurance, property insurance, general liability insurance and more. Not only is insurance a varied market, but it’s also a lucrative sector for small business owners to enter. Almost 6,000 individual insurance companies in the United States assessed $1.3 trillion in insurance premiums in 2020.
Why You Should Consider an Insurance Franchise
Are you interested in starting your own business? Insurance franchises can offer plenty of opportunities to licensed insurance agents and those interested in entering the insurance industry. Starting an insurance franchise can be a promising business option for the following reasons:
- By buying into a successful franchise system, the small business owner gains peace of mind knowing they’ve invested in a proven business model with a successful plan that works.
- When franchise owners start their own insurance agencies, they benefit by partnering with a company with brand recognition, ensuring that customers will be familiar with the insurance agency before they ever visit a local office.
- By starting an insurance franchise, the small business owner reduces their business risk thanks to support from their corporate partners.
- A successful insurance franchisee can either choose to run their own office in an owner-manager role, or they can ease their daily burden by hiring a manager to handle the franchise’s daily operations.
- Insurance franchise owners have the opportunity to expand their businesses through the corporate brand without the risk of debt or cost of equity.
| Reasons to Consider an Insurance Franchise | Description |
|---|---|
| Proven Business Model | Investing in an insurance franchise means adopting a proven business model with a successful track record, providing peace of mind to small business owners. |
| Brand Recognition | Insurance franchise owners benefit from partnering with a well-known company, ensuring that potential customers are already familiar with the insurance agency's name and reputation. |
| Reduced Business Risk | Starting an insurance franchise comes with corporate support, which reduces the business risk for small business owners, helping them navigate challenges effectively. |
| Ownership Flexibility | Successful franchisees have the option to manage their own office or delegate daily operations to a manager, offering flexibility in how they run their insurance franchise. |
| Business Expansion Opportunities | Insurance franchise owners can grow their businesses under the corporate brand, allowing for expansion without taking on significant debt or equity costs. |
Criteria for Choosing an Insurance Franchise: Our Methodology
Insurance franchise opportunities can be lucrative for entrepreneurs. Let’s start by outlining the general criteria that small business owners or entrepreneurs should consider when choosing the best insurance franchise:
Scale of Importance (1 to 5, with 5 being most critical):
- Franchise Reputation (5/5): The reputation of the insurance franchise within the industry and among customers is crucial. A well-regarded franchise is more likely to offer a proven business model and support.
- Training and Support (5/5): Comprehensive training programs and ongoing support from the franchisor are essential for success in the insurance industry. This includes training on products, customer service, and marketing.
- Regulatory Compliance (5/5): Insurance is a highly regulated industry. Ensuring that the franchise complies with all relevant laws and regulations is of utmost importance to avoid legal issues.
- Product Offerings (4/5): The variety and quality of insurance products offered by the franchise are significant. A diverse range of insurance options can attract a broader customer base.
- Customer Base and Demand (4/5): Assess the demand for insurance products in your target market. A franchise located in an area with a high demand for specific insurance types can be more profitable.
- Location and Accessibility (4/5): Location matters in the insurance business. Proximity to potential customers and accessibility to your office can impact your success.
- Marketing and Advertising Support (4/5): Franchises that provide marketing materials, strategies, and advertising support can help you attract and retain clients more effectively.
- Costs and Fees (3/5): Evaluate the initial franchise fee, startup costs, and ongoing royalty fees. Ensure they align with your budget and financial resources.
- Technology and Tools (3/5): In today’s digital age, having access to cutting-edge technology and tools can give you a competitive advantage in selling insurance products and managing clients.
- Flexibility and Customization (3/5): Some insurance franchises offer more flexibility in customizing insurance packages than others. Depending on your clients’ needs, this criterion may vary in importance.
- Community Engagement (2/5): Being involved in the local community and understanding the unique needs of your potential clients can be beneficial for building trust and credibility.
- Profitability Track Record (2/5): Research the franchise’s historical profitability data and financial performance. A franchise with a track record of profitability is a good sign.
Top Insurance Franchises
Want to start a superior insurance franchise? You can harness the power of brand recognition and corporate support by starting your own insurance agency affiliated with some of the top insurance franchises:
1. Fiesta Auto Insurance
While the company originally offered insurance for automobiles, motorcycles, and watercraft, Fiesta Auto Insurance now provides business insurance and homeowner’s policies, as well. Fiesta franchises also offer insurance to cover public events and worker’s compensation, and the company features a tax preparation service. Entrepreneurs can invest in a Fiesta Auto Insurance franchise with a $15,000 franchise fee and $80,000 in available liquid capital.
2. Estrella Insurance
Ranked among the top franchises among insurance agency rankings, A prospective franchisee can start their own insurance agency with Estrella Insurance for an initial franchise fee of $25,000, however after all costs are considered, Estrella advises the total initial investment to open an Estrella insurance franchise totals about $49,500. Once a new franchisee obtains their insurance license, the company provides 8 weeks of training to prepare them for success.
3. Allstate Insurance Company
By opening an Allstate Insurance franchise, agency owners are granted the flexibility to operate their franchises in their own ways. Of course, the company also expects positive performance from its agents. Entrepreneurs interested in becoming an Allstate franchisee will need an initial cash investment of $100,000, as well as $50,000 in liquid capital.
4. Farmer’s Insurance
Farmer’s Insurance rewards its owner-operators with exclusive access to the company’s portfolio of benefits, including startup bonuses, commissions and performance bonuses. A Farmers Agency owner will need an initial investment of $50,000 to start their new franchise.
5. Insurance Lounge Network
Insurance Lounge strives to make the insurance shopping experience as simple as possible, including making prospecting clients a thing of the past. The Insurance Lounge retail setting and attractive design bring the clients to the franchisees. An ideal opportunity for entrepreneurs with an insurance background, the initial franchise fee ranges from $10,000 to $50,000, although $100,000 in cash is also required.
6. Brightway Insurance
Brightway Insurance provides a range of insurance services for franchisees, with policies protecting homes and businesses, as well as life insurance and auto insurance. Franchise owners benefit from the brand’s innovative business plan, and they can take advantage of a centralized service center and accounting office. Interested entrepreneurs need an initial investment of about $140,000 to open a Brightway Insurance franchise. Fortunately, qualified prospective franchisees can get started with as little as $10,000 down with the help of Brightway financing.
7. Pronto Insurance
The goal of the Pronto Insurance company is to offer affordable insurance products for those seeking auto, home and business insurance. The company boasts low-cost retail locations that can be built quickly and strong brand awareness with marketing materials focused on the Hispanic market. The initial franchise fee ranges from $10,000 to $40,000, and the company requires franchisees’ to possess working capital of $10,000 to $15,000.
8. Freeway Insurance
When small business owners open a Freeway Insurance franchise, they have the benefit of an established insurance business model and a broad range of insurance and ancillary products. A prospective Freeway Insurance franchisee doesn’t have to have insurance experience to qualify for a Freeway Insurance franchise, since the company welcomes financially qualified, business-savvy professionals who understand the importance of excellent customer service. The initial franchise fee to open a Freeway Insurance franchise is $15,000, although the total initial investment can range from about $60,000 to $100,000
9. Boardwalk Insurance Group
With Boardwalk Insurance, franchisees can write an insurance policy for practically any customer, specifically those dealing in niche markets. Not only can independent agents sell policies for auto insurance, but they also can write insurance policies for government agencies and even offer skyscraper insurance. Boardwalk Insurance Group advertises nominal fees and costs to its new franchisees, as well as initial and ongoing training and support.
10. Goosehead Insurance
With a minimum initial investment of at least $60,000, entrepreneurs can start serving customers with a Goosehead Insurance franchise business. Goosehead furniture features an innovative business model that helps each franchise business thrive. The insurance company also offers advanced marketing support and a groundbreaking digital agent that delivers qualified leads.
11. GreatFlorida Insurance
Franchise owners can invest in insurance carriers that boast $500 million in premiums and 124 Florida locations by opening a GreatFlorida Insurance franchise. GreatFlorida Insurance agents earn commissions ranging from 15-21%, plus bonuses for carriers. With no sales quotes, franchisees can enjoy success without risking their work-life balance. To start, a franchisee needs a 2-20 year license as well as 3 years of experience in the insurance industry.
12. We Insure Group, Inc.
Founded by a former insurance agent, We Insure Group credits its successful business model for the company’s impressive growth. We Insure is an independent insurance solution, offering agents access to multiple insurance companies. We Insure lets its successful franchisees focus on selling while the company handles the back-end support. Prospective franchisees need at least $39,000 in liquid capital, and We Insure offers a discounted franchise fee to veterans.
13. Global Green Insurance Agency
The Global Green Insurance Agency provides policies for a variety of insurance needs, including life, automobiles, homes and commercial operations, as well as insurance services for farms and ranches, landlords, renters and recreational vehicles. After an initial franchise fee of $10,000, and the total initial investment to start a Global Green franchise ranges from $39,000 to $74,000.
14. Paul Davis Restoration
According to Paul Davis Restoration, it offers North America’s top property damage reconstruction restoration. According to Paul Davis, the reported revenue for franchise locations 2 years and older is just under $4 Million. Paul Davis franchisees primarily deal with the damage from fire, mold, water, storms, natural disasters and other emergencies. At the same time, franchisees benefit from the company’s experience, training and ongoing support.
15. Superior Insurance
New Superior Insurance franchise owners can choose to run their business from a retail location, shared office space, or an office location, each with its own cost and compensation structure. Superior Insurance franchisees enjoy low overhead as the brand negotiates their costs and commissions as high as 75% of the policies they write. Startup costs range from $2,500 to $75,000, depending on the type of insurance office they choose to open. Interested potential franchisees also can choose a co-franchising opportunity and start their businesses for as little as $1,350.
How to Choose the Best Franchise to Set Up Your Insurance Business
What do you consider before choosing to partner with an insurance franchise? Obviously, it’s important to examine the franchise disclosure document and become familiar with any hidden costs and requirements. The franchise agreement will also detail the roles expected of both the franchisee and the insurance company. Still, other considerations should be made, including:
Cost
Be aware of all the costs associated with opening your insurance franchise. An insurance company might advertise an affordable initial franchise fee, but most also require franchisees to have additional liquid capital as well as an assortment of other fees to start a new franchise business. The minimum initial investment easily can total tens of thousands more than the startup fee.
Location
Where will your insurance franchise be located? Does the insurance company allow you to choose your own location, or will they assign your a territory? Keep in mind that the insurance industry is made up of both national and regional carriers, so a company serving Florida may not be an option to service Rhode Island or North Dakota.
Support
What sort of support does the insurance company offer its new franchisees? Will you get training or will it be up to you to get up to speed with the insurance franchise’s processes and procedures? Does the company provide leads or ongoing training and support? These factors will become paramount as you work to establish your franchise business and help it grow.
- READ MORE: How to Become a Licensed Insurance Agent
Benefits
What is the compensation structure for the insurance franchise, and how are commissions determined? Not only is it important to evaluate potential earnings, but franchise owners should determine what other benefits the company provides its franchisees, including group insurance and retirement plans.
How Much Does It Cost to Open an Insurance Franchise?
The initial franchise investment to open an insurance franchise ranges from $5,000 to $25,000 for the initial franchise fee. However, most insurance companies also require their franchisees have liquid capital of $25,000 to $75,000, depending on the brand. Additional fees generally also apply to starting an insurance franchise, but the total costs vary from one state to another. Of course, there are agencies that offer franchise ownership for less, so it’s important to understand the disclosure requirements.
Is It Profitable to Own an Insurance Company?
Insurance companies have been extremely profitable in recent years. In fact, the insurance industry has generated $448 billion – not including pretax income – over the past decade. An insurance agency owner gains access to a proven system that is known to be highly profitable. According to ICSID, it is common for Allstate agencies to generate profits of 50-65 percent of their revenue.
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