Plynthe Insurance

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Personal Insurance Agent Business Plan

Market Analysis Summary

The market for personal insurance consists of all adult individuals, potentially, as there are products available which are appropriate for every type of person from the moment they leave their parents' home to the day they die. Therefore, the market for an insurance agent selling personal insurance in Peristyle Gardens is synonymous with the adult population of Peristyle Gardens. In 2008, the population of adults (18 and older) in the town was estimated at 57,500. The town has an overall annual growth rate of 2% due to new developments in the town and an aging population with ever-increasing life expectancies.

Within this target market, the market segments on which Plynthe Insurance will focus include renters, homeowners, individuals over 40 years of age, and new parents/parents-to-be.

Market Segmentation

The market segments described include a great deal of overlap. For example, many adults over the age of 40 are also homeowners and the remainder are renters. The new parent segment are also either homeowners or renters, generally. Each segment has different needs for insurance products, however, and those who fall into more than one segment have a need for more than one product.

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Renters 2% 11,000 11,220 11,444 11,673 11,906 2.00%
Homeowners 1% 34,000 34,340 34,683 35,030 35,380 1.00%
Adults over Age 40 3% 35,000 36,050 37,132 38,246 39,393 3.00%
New Parents/Parents-To-Be 2% 3,000 3,060 3,121 3,183 3,247 2.00%
Total 2.02% 83,000 84,670 86,380 88,132 89,926 2.02%

Target Market Segment Strategy

Plynthe Insurance will focus its initial marketing on those at the younger end of the spectrum, including renters and new parents/parents-to-be. The strategy will be to begin by selling renter's insurance and life insurance to clients and then earn their ongoing trust in order to sell additional insurance policies to them as new needs arise. Younger clients will also serve as a longer annuity as insurance policies are renewed year after year.

 

As these clients increase in age they will have growing needs for homeowner's insurance, valuable items insurance, life insurance, and, eventually, long-term care and long-term disability.

Service Business Analysis

The United States Department of Labor offers the following summary of the insurance industry:

Most people have their first contact with an insurance company through an insurance sales agent. These workers help individuals, families, and businesses select insurance policies that provide the best protection for their lives, health, and property.

Insurance sales agents, commonly referred to as "producers" in the insurance industry, sell one or more types of insurance, such as property and casualty, life, health, disability, and long-term care. Property and casualty insurance agents sell policies that protect individuals and businesses from financial loss resulting from automobile accidents, fire, theft, storms, and other events that can damage property. For businesses, property and casualty insurance can also cover injured workers' compensation, product liability claims, or medical malpractice claims.

Life insurance agents specialize in selling policies that pay beneficiaries when a policyholder dies. Depending on the policyholder's circumstances, a cash-value policy can be designed to provide retirement income, funds for the education of children, or other benefits as well. Life insurance agents also sell annuities that promise a retirement income. Health insurance agents sell health insurance policies that cover the costs of medical care and loss of income due to illness or injury. They also may sell dental insurance and short-term and long-term-disability insurance policies. Agents may specialize in any one of these product areas, or function as generalists, providing multiple products to a single customer.

An increasing number of insurance sales agents are offering comprehensive financial planning services to their clients. These services include retirement planning, estate planning, and assistance in setting up pension plans for businesses. As a result, many insurance agents are involved in "cross-selling" or "total account development". Besides offering insurance, these agents may become licensed to sell mutual funds, variable annuities, and other securities. This practice is most common with life insurance agents who already sell annuities, but many property and casualty agents also sell financial products.

Insurance sales agents also prepare reports, maintain records, and seek out new clients. In the event that policy holders experience a loss, agents help them settle their insurance claims. Increasingly, some agents are also offering their clients financial analysis or advice on how to minimize risk.

Insurance sales agents working exclusively for one insurance company are referred to as captive agents. Independent insurance agents, or brokers, represent several companies and match insurance policies for their clients with the company that offers the best rate and coverage.

Technology has greatly affected the insurance business, making it much more efficient and giving the agent the ability to take on more clients. Agents' computers are now linked directly to insurance carriers via the Internet, making the tasks of obtaining price quotes and processing applications and service requests faster and easier. Computers also allow agents to be better informed about new products that the insurance carriers may be offering.

The growing use of the Internet in the insurance industry has altered the relationship between agent and client. Agents formerly used to devote much of their time to marketing and selling products to new clients. Now, clients are increasingly obtaining insurance quotes from a company's Web site and then contacting the company directly to purchase policies. This interaction gives the client a more active role in selecting their policy, while reducing the amount of time agents spend actively seeking new clients. Insurance sales agents also obtain many new accounts through referrals, so it is important that they maintain regular contact with their clients to ensure that the clients' financial needs are being met. Developing a satisfied clientele that will recommend an agent's services to other potential customers is a key to success for agents.

The Department of Labor reports that there were 436,000 insurance sales agents in 2006 and that approximately 50% of them were independent agents or worked for brokerages. Urban areas tend to have a greater concentration of insurance agents. Peristyle Gardens has approximately 28 insurance agents (or roughly 1 for every 2,000 residents). However, these agents do not all offer the same products as Plynthe Insurance.

Competition and Buying Patterns

Customers seek insurance through one or more of the following:

  • Referrals from trusted friends, family, and colleagues
  • Brand names of national companies (Allstate, State Farm, Geico, Progressive, etc.)
  • Local office location

The greater the insurance need of an individual, the more likely they are to seek a local office where they can meet with an agent and discuss their needs in person. For the target markets of renters and new parents/parents-to-be in Peristyle Gardens, the primary competition will come from national insurance carriers rather than other independent agents.