An insurance company offers different kinds of insurance policies. A policy that represents an insurance contract provides the policyholder with financial protection or payment from an insurance firm against losses. In order to make payments to the insured more manageable, the company pools the risks of its clients.

According to statistics, the market size measured by revenue of the insurance industry in Canada is $81.1 billion in the year 2022, and the industry is expected to increase by 2.8 percent in the subsequent year. The insurance sector boosts Canada’s economy by more than $860 billion annually.

Steps on How to Start an Insurance Company in Canada  

  1. Conduct Market Research

Market research is essential to the business’s success. It offers information about the industry and competitive environment. It’ll inform you how the target clients and customers you wish to reach view your company. This will help you figure out who your consumers are, their locations, and the ones who may buy from you.

The research will enable you to understand the desire of your target market and adjust to their needs in order to win their loyalty and also win over brand advocates.

a. Who is the Target Market for Insurance Companies in Canada?
  • Automobile owners
  • Pet owners
  • Corporate organizations
  • Retired people
  • Sports men and women
  • Military men and women
  • Children and babies
  • Small agencies
  • Transporters
  • Shipping companies
  • Religious organizations
  • Entrepreneurs.
b. Is an Insurance Company a Profitable Business in Canada?

Yes, an insurance company is a profitable business, its sector boosts Canada’s economy by more than $860 billion annually.

c. Are There Existing Niches in the Industry?

Yes, there are niches when it comes to the insurance industry, and they are;

  • Life and annuities insurance policy cover
  • Medical insurance policy cover
  • Vehicle insurance policy cover
  • Pet insurance policy cover
  • Agricultural insurance policy cover
  • Aviation insurance policy cover
  • Financial reinsurance
  • Guaranteed asset protection insurance policy cover
  • Group insurance
  • Inland marine insurance/marine insurance/shipping insurance
  • Travel insurance policy cover
  • Liability insurance/professional liability insurance
  • Property and casualty insurance policy cover.
d. Who are the Major Competitors?
  • Aviva Insurance Company of Canada
  • AIG Insurance Company of Canada
  • Blue Cross
  • Economical Insurance
  • Chubb Insurance Company of Canada
  • Liberty Mutual Canada
  • Travelers Insurance Company of Canada
  • Royal & Sun Alliance Insurance Company of Canada
  • Lloyd’s Of London
  • Victor Insurance
  • Markel Canada
  • Intact Financial Corporation
  • TD Insurance
  • RSA Group
  • Sun Life
  • Manulife insurance
  • La Capitale
  • RBC Insurance
  • Canada Life.
e. Are There County or Province Regulations or Zoning Laws for Insurance Companies in Canada?

No, there are no provincial regulations or zoning laws for insurance companies, but players in this industry are expected to work with the regulations governing the related businesses in the county or state where their business is domiciled.

f. Is There a Franchise for an Insurance Company?

Yes, there are franchise opportunities for insurance companies, they are the following;

  • Sussex Insurance™
  • All-Risks Insurance Brokers Limited
  • Ai Insurance Organization Inc.
g. What Do You Need to Start an Insurance Company in Canada?
  • A feasibility report
  • Business and marketing plans
  • Business licenses and permits
  • Office space
  • Computers and Servers
  • A corporate bank account
  • Software apps
  • Employees
  • Startup capital
  1. Choose a Memorable Business Name

When looking to start a business, before you can begin to file the necessary documents with the constituted authorities or start your website, it is necessary that you come up with a name that you will be recognized with. It is essential that the name you come up with can easily be pronounced, is unique and easily memorable.

Some of the catchy business name ideas suitable for an insurance business are;

Creative Insurance Business Name ideas
  • Lloydminster Morgan© Insurance Company, Inc.
  • Clement Waldorf® Insurance Company, Inc.
  • Shawinigan Jackson© Insurance Company, Inc.
  • Leamington Jones® Insurance Company, Inc.
  • Macalister Jonah™ Insurance Company, Inc.
  • Anthony Lawson™ Insurance Company, Ltd
  • James Kingston© Insurance Company, Ltd
  • Tuchel Adams® Insurance Company, Inc.
  • Maiden Penticton© Insurance Company, Inc.
  • Larry Cage© Insurance Company, Inc.
  • Tyson Ray® Insurance Company, Inc.
  • Moose Jaw® Insurance Company, Inc.
  • Stratford Thomas® Insurance Company, Inc.
  • Cape Breton – Sydney® Insurance Company, Inc.
  • Golan Heights® Insurance Company, Inc.
  • Remigius Hyacinth© Insurance Company, Inc.
  • Thomas Curry™ Insurance Company, Ltd
  • Brooklynn City® Insurance Company, Inc.
  • Barry Knawels® Insurance Company, Inc.
  • Mendy Fuller™ Insurance Company, Inc.
  1. Register Your Business

a. What Type of Business Structure is Best for an Insurance Company in Canada?

There are different options for business structures, but the corporation is the one that most people in the industry consider best. A corporation has limited liability—the owners are not responsible for the debts or liabilities of the company.

Note that it is simple to get funds from investors or financial institutions. So, you must be incorporated in order to conduct business with governments or other businesses, and you can also distribute business profits in the form of dividends or salary to reduce your tax obligations.

b. Steps to Form a Corporation in Canada
  • Whether it is a federal or provincial/territorial incorporation, you should register your business.
  • Contact the Canada Revenue Agency (CRA) to open a corporate income tax account and obtain a federal business number.
  • In Canadian jurisdictions where you want to conduct business, ensure you register as an extra-provincial or extra-territorial corporation.
c. What Type of License is Needed to Open an Insurance Company in Canada?
  • General Business License
  • Zonal Permits (Applicable in some cities)
  • Signage Permit
d. What Type of Certification is Needed to Open an Insurance Company in Canada?

You don’t need any special certification to open an insurance company in Canada.

e. What Documents are Needed to Open an Insurance Company in Canada?

These are legal documents that are required if you want to run an insurance company in Canada;

  • Council Permit
  • Business and Liability Insurance
  • State Permit and Building Approval
  • Certificate of Incorporation
  • Business License
  • Business Plan
  • Online Terms of Use
  • Online Privacy Policy Document
  • Contract Document.
f. Do You Need a Trademark, Copyright, or Patent?

There may not be a need to apply for trademark protection or intellectual property protection when launching an insurance business in Canada. The nature of the business allows you to run the firm without having to sue anyone who uses your intellectual property illegally.

  1. Cost Analysis and Budgeting

a. How Much Does It Cost to Start an Insurance Company in Canada?

The startup cost for an insurance company may range from $50,000 to $150,000 or more.

b. What are the Costs Involved in Starting an Insurance Company in Canada
  • The total fee for registering the business in Canada – $750
  • Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines, and other software) – $8,300
  • Marketing promotion expenses for the grand opening of the insurance company in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580
  • The total cost of hiring a business consultant including writing a business plan – $2,500
  • The total cost of the purchase of insurance (general liability, workers’ compensation, and property-casualty) coverage at a total premium (initial (first) premium) – $4,400
  • Other start-up expenses include commercial satellite tv subscriptions, stationery – $500, and phone and utility deposits $2,800
  • The cost of the purchase of software apps: $5,000
  • The cost of store equipment (cash register, security, ventilation, signage) – $1,750
  • Working capital – $1 million
  • The cost of launching a website –  $2000
  • The cost of the opening party- $3,000
  • Miscellaneous: $2,000
c. What Factors Determine the Costs of Opening an Insurance Company in Canada?
  • The size of the insurance company and the type of insurance
  • The choice of location
  • The required licenses and permits
  • The type of facility
  • The additional services offerings
  • The cost of hiring and paying a business consultant and attorney
  • The cost of branding, promotion, and marketing of the insurance company
  • The cost of furnishing and equipping the insurance company facility
  • The cost of the insurance policy covers
  • The cost of registering the business
  • The cost of recruiting and training employees
  • The cost of the purchase and customizing of uniforms, shoes, and caps for the employees
  • The cost of the grand opening of the insurance company.
d. Do You Need to Build a Facility? If YES, How Much Will It Cost?

You don’t need to build a facility for the business. You can choose to work from home and only rent an office for corporate fronting.

e. What are the Ongoing Expenses of an Insurance Company?
  • Utility bills (internet subscriptions, phone bills, signage and software renewal fees et al)
  • Rent
  • Salaries of the employees.
f. What is the Average Salary of your Staff?
  • Chief Executive Officer – $65,000
  • Human Resources and Admin Manager – $46,000
  • Underwriter – $45,000
  • Accountant – $42,000
  • Insurance officers – $38,000
  • Client Service Executive -$28,000 Per Year
g. How Do You Get Funding to Start an Insurance Company in Canada?
  • Raising money from personal savings
  • Raising money from investors and business partners
  • Sell shares to interested investors
  • Applying for a loan from your bank
  • Pitching your business idea and applying for business grants and seed funding from the government, donor organizations, and angel investors
  • Source for soft loans from your family members and friends.
  1. Write a Business Plan

a. Executive Summary

Lloydminster Morgan© Insurance Company, Inc. is a registered and licensed insurance company. The company will have its headquarters in Mississauga, Ontario. We have obtained conventional office space in a prime location in one of the city’s commercial districts.

At several locations around Mississauga, Ontario, and other provinces across Canada. So we are prepared to offer trusted insurance policy covers. Lloydminster Morgan© Insurance Company, Inc. is established with the aim of conducting insurance business in a professional, ethical, and customer-driven approach.

We are aware that businesses in this modern age require diverse and sophisticated approaches. This is why we established our insurance firm to offer different kinds of insurance services to our target market.

b. Services
  • Life and Annuities Insurance policy cover
  • Medical Insurance policy cover
  • Vehicle Insurance policy cover
  • Pet Insurance policy cover
  • Agricultural Insurance policy cover
  • Aviation Insurance policy cover
  • Financial Reinsurance
  • Guaranteed Asset Protection Insurance policy cover
  • Group Insurance
  • Inland Marine Insurance/Marine Insurance/Shipping Insurance
  • Travel Insurance policy cover
  • Liability Insurance/Professional Liability Insurance
  • Property and Casualty Insurance policy cover.
c. Mission Statement

Our mission is to be listed as amongst the top 10 insurance companies in Canada based on revenue generation (premium collections et al), offering trust and an easy way of doing business. We will make sure that our clients get their claims as when due without unnecessary delays.

Vision Statement

Our vision is to build an insurance company – a brand that will become the number-one choice for individuals, families, and corporate clients in the entire Mississauga, Ontario.

d. Goals and Objectives

The goals and objectives of the insurance company are to help lessen monetary uncertainty and manage unintentional loss. This is accomplished by exchanging the payment of a predetermined fee—an insurance premium—to a reputable insurer for the assumption of the risk of a significant loss, and a guarantee to make payments in the case of such a loss.

e. Organizational Structure
  • Chief Executive Officer
  • Human Resources and Admin Manager
  • Underwriter
  • Accountant
  • Insurance Officers
  • Client Service Executive.

Marketing Plan

a. SWOT Analysis

Strength:

  • Effective structure in place
  • Experienced and qualified employees and management
  • Reliable premium collections strategy
  • Support from relevant organizations
  • Water-tight strategies on how to expand beyond the major markets.

Weakness:

  • Capitalization challenges
  • A new business that will be competing with well-established insurance companies
  • Inability to retain experienced and qualified employees longer than desired.

Opportunities:

  • Partnerships and mergers between established insurance companies
  • Good support structure for insurance companies in Canada.

Threat:

  • The arrival of a new insurance company within our market space
  • Unfavorable government policy and regulations
  • Differences in management and culture are the biggest barriers to integrating insurance company startups into traditional companies
  • Liability problems
  • Continuously changing consumer demands as it relates to how they expect insurance companies to serve them.
b. How Do Insurance Companies Make Money?

The make money by applying the following services;

  • Life and Annuities Insurance policy cover
  • Medical Insurance policy cover
  • Vehicle Insurance policy cover
  • Pet Insurance policy cover
  • Agricultural Insurance policy cover
  • Aviation Insurance policy cover
  • Financial Reinsurance
  • Guaranteed Asset Protection Insurance policy cover
  • Group Insurance
  • Inland Marine Insurance/Marine Insurance/Shipping Insurance
  • Travel Insurance policy cover
  • Liability Insurance/Professional Liability Insurance
  • Property and Casualty Insurance policy cover.
c. Payment Options
  • Payment via bank transfer
  • Payment with cash
  • Payment via credit cards/Point of Sale Machines (POS)
  • Payment via online bank transfer
  • Payment via check
  • Payment via mobile money transfer
  • Payment via bank draft.
d. Sales and Advertising Strategies
  • Introduce your insurance company and the services your offer, by sending introductory letters alongside your brochure to corporate organizations, households, individuals, business owners, and other key stakeholders in the city where your insurance company is located.
  • Advertise on the internet blogs and forums, and also on social media like Twitter, Facebook, and LinkedIn to get your message across.
  • Create a website for your business, so as to give your business an online presence
  • Advertise your business in community-based newspapers, local tv, and radio stations
  • List your business on yellow pages ads (local directories)
  • Encourage the use of word-of-mouth marketing (referrals)

Financial Projection

a. How Much Should You Charge for your Services?

There is no fixed price for insurance policy cover because different types of insurance attract different cover and premiums.

d. How Much Profit Do Insurance Company Owners Make a Year in Canada?

An insurance company owner in Canada will make a profit of between $40,000 to $80,000 and above. Per year.

c. What Factors Determine the Amount of Profit to Be Made?
  • The capacity of the insurance company and the type of insurance cover they are selling
  • The location of the insurance company is covering
  • The management style of the insurance company
  • The business approach of the insurance company
  • The advertising and marketing strategies adopted by the insurance company facility – business
  • The number of years the insurance company facility is in the business.
d. What is the Profit Margin of an Insurance Company Services?

The profit margin of an insurance company could range between 2 percent to 5 percent. The annualized profit margin is calculated by subtracting the insurance company’s entire annual costs from its annual revenue. The percentage is calculated by dividing this sum by the total revenue and multiplying the result by 100.

e. What is the Sales Forecast?
  • First Fiscal Year: $350,000
  • Second Fiscal Year: $580,000
  • Third Fiscal Year: $600,000
  1. Set Up your Shop/Office

a. How Do You Choose a Perfect Location for an Insurance Company in Canada?
  • The demography of the location
  • The demand for insurance policies in the location
  • The purchasing power of businesses and the residents of the location
  • Accessibility of the location
  • The number of insurance companies in the location
  • The local rules and regulations in the community/state
  • Traffic, parking and security et al.
b. What City is Best to Open an Insurance Company in Canada?
  • Toronto, Ontario
  • Mississauga, Ontario
  • Kitchener, Ontario
  • Hamilton, Ontario
  • Montreal, Quebec
  • Calgary, Alberta
  • Ottawa, Ontario
  • Edmonton, Alberta
  • Winnipeg, Manitoba
  • Vancouver, British Columbia.
c. What Equipment is Needed to Operate an insurance company?

You would need computers (laptops), an internet facility, a telephone, a fax machine and office furniture (chairs, tables, and shelves).

  1. Hire Employees

When hiring employees for an insurance company, you should hire a competent Chief Executive Officer (Chief Investigator), Human Resources and Admin Manager, Account Manager, Insurance Officers, Underwriter, and Client Service Executive.

  1. Launch the Business Proper

No insurance company opens without first organizing an opening party to formally launch the business. A low-key launching party rather than a big opening party for everyone in the neighborhood, where your insurance company will be located may be a better option.

With proper launching, you will formally inform your the residents in your  area that your insurance company is open for services.

a. What Makes an Insurance Company Successful?
  • Ability to sale deals
  • Willingness to take chances
  • Tenacity
  • Customer-centric business approach
  • Good marketing and sales approach
  • Strong vision
  • Passionate leadership
  • Innovative Ideas
b. What Happens During a Typical Day at an Insurance Company?
  • The office is open for the day’s work
  • Office meeting is held
  • Employees take-up their job descriptions
  • Marketers go out to market different insurance policies
  • Administrative works are carried out (claims are processed and premiums are collected)
  • Reports are written and submitted to superior officers
  • The business is closed for the day.
c. What Skills and Experience Do You Need to Build an Insurance Company?
  • Excellent sales skills
  • Excellent accounting and bookkeeping skills
  • Excellent investigative skills
  • Excellent marketing skills
  • Excellent computer skills
  • Ability to pay attention to details
  • Good managerial and human development skills
  • Visionary leadership
  • Team-building and interpersonal skills
  • Excellent communication and negotiation skills
  • Organizational skills
  • Problem-solving ability
  • Good supervisory skills
  • Experience in managing an insurance company
  • Experience in business administration
  • Experience in handling premium collections software and other relevant software.