How to Create an Insurance Company Partnership
Independent, insurance company partnerships can be created for a variety of reasons. Each state has its own requirements, which usually are available through the state's department of insurance. Many small businesses and professional organization develop insurance partnerships in hopes of maintaining low premiums. For instance, Illinois lawyers established ISBA Mutual Insurance Company (isbamutual.com) to provide professional liability insurance.
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Instructions
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Specify the partnership practice--or whether you will provide bond, homeowners, automobile, health, surety or professional liability insurance. You also should decide the coverage area, or whether insurance will be available in Arizona, Oregon and Nevada.
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Attend a training course (for example, kaplanfinancial.com, ieatraining.com) that satisfies state insurance education requirements. You must complete continuing education courses after you get licensed.
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Complete necessary applications that will differ depending on the practice area and location. If the automobile insurance partnership will be based in California, you would prepare an application (with information on personal lines, fire and casualty), submit the filing fee, and wait for a license so that you can sell insurance.
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Gather sufficient capital to cover an ideal amount of risk. For instance, you can establish $200,000 as a basic fund and purchase reinsurance to cover losses beyond that amount.
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Develop a risk management system (as in fiservfsc.com) to distinguish claims and give quotes. Regardless if the insurance company will be private or public, you should assess applicants to determine if they represent reasonable risk.
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Tips & Warnings
Most states require insurance founders to be at least 18 years old. Expect to undergo a background check to determine if you were involved in insurance fraud in another state.
It is a felony crime to operate as an insurance company without the required licenses--even if you are licensed in other states.
