The attractiveness of the insurance business lies in the high income that such a company is able to receive, and the prospects for the dynamics of the development of the insurance business. Interest in insurance from both the general population and corporate clients is constantly growing.
The desire to protect yourself from various risks is a natural and healthy desire of any person.
Even in difficult crisis years, even in spite of high competition, most insurance companies continue to make a profit if they are managed by prudent and prudent managers. However, the attractiveness of this direction does not reduce the difficulty of new companies entering the market.
The reason for this is the need for high initial capital and experience in this challenging business area.
The bankruptcy of some well-known insurance companies, often deliberately, has led the state to seek to leave only reliable insurance companies on the market, with large equity capital, able to withstand stressful situations. Therefore, to create a new insurance company, it is necessary to have enough funds to prove its reliability and obtain an appropriate license.
The amount of initial funds to be contributed to the authorized capital at the stage of registration depends on the list of services that the insurance company is going to provide.
If the insurance company provides only medical insurance services, it is required to contribute at least 60 thousand dollars to the authorized capital. For other types of insurance services, the authorized capital is even higher, starting at $120,000. In general, to create an insurance company, you need to count on the contribution of funds to the authorized capital in the amount of approximately 500 thousand dollars.
It is clear that a novice entrepreneur is not able to invest such a huge amount of money in his own business, therefore, as a rule, financial groups, banks, and large entrepreneurs are engaged in the business of insurance companies.
Naturally, the cost of establishing an insurance company is not limited to the contribution of funds to the authorized capital. Approximately half a billion dollars more must be spent on creating numerous representative offices of the insurance company, on staffing and training insurance clients, and on conducting an advertising campaign.
An important condition for creating an insurance company is the correct definition of target customers and a set of services offered.
The success of a new company is determined, among other things, by this, since fierce competition in the insurance market makes it possible only with great difficulty to find the optimal niche for oneself.
The size of the insurance premium, in almost all types of activities of the insurance company, is about 10%.
To cover the initial costs and reach profitability, the turnover of the insurance company must be in the billions of dollars. Such turnover can be achieved either through contracts with large corporate clients, or by expanding the client base among small entrepreneurs and ordinary people. Attracting customers, in turn, requires the growth of the network of insurance agents and the increase in the cost of expanding the network. If we add to this the risks that are always present in the insurance business, it becomes clear that it is possible to achieve success in the insurance business only under the condition of quality management, a clear and tough business plan.
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