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With any B-Plan Purchase
425 Page Capital Directory
Through Apr. 30


Business Plan Writer
$425 Flat Rate
No Templates Used
7 Day Turnaround

All Purchased Plans
Are Updated for 2017


Insurance Agency SWOT Analysis

 

Strengths

 

Insurance agencies generate income, primarily, two different ways. First, they receive substantial commissions when a person or business starts a new policy with the company that the agent is representing. Second, they receive an ongoing stream of income based on the renewals of these policies each year. As such, these recurring streams of revenue make insurance agencies very valuable businesses. Many laws and regulations require that insurance policies are sold through a licensed agent. As such, there are somewhat high barriers to entry for starting this type of business. Currently, there are no pending pieces of legislation that would impact the way that these companies operate. The gross margins generated by insurance agencies is relatively high.


Weaknesses

 

The primary weakness of an insurance agency is that in any town or city, there are a number of individuals that have a license to operate as an insurance producer. Additionally, many banks have started to offer their own in-house insurance brokering and insurance agency operations. As such, independent agencies need to develop appropriate differentiating factors. One of the ways that this is accomplished is by offering insurance products from a number of different carriers.

 

Opportunities

 

The most common way that independent insurance agencies grow is by hiring additional associates and expanding their territories of operation. Some individual agencies expand by operating in a more brokerage focused capacity. In order for an insurance agency to expand, it is imperative that they have an expansive presence on the internet. Many smaller firms now use search engine optimization and pay per click advertising in order to boost their visibility.

 

Many insurance agencies also expand via acquisition by acquiring companies that are already in operation within their target market. This is one of the fastest ways to expand an existing insurance agency. Banks like providing capital for acquisitions given the highly predictable and economically secure nature of revenues.

 

Threats

 

One of the greatest threats faced by insurance agency companies is that these businesses are quickly becoming commoditized via the improvement of information technology. Additionally, the laws may change regarding how insurance leads are processed so that individual agents no longer need to produce policies. However, there is very little chance of this occurring in the foreseeable future.


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