How does one become an insurance carrier?

[Aziz Saleh]

I have been pondering and googling this for a day and can't seem to get a handle on how one can become one, the startup costs associated with it, and general information on how to start your own insurance company.

Most of the articles are about how to become a broker or an agent. Hopefully, I can get more information here.

Sorry if this isn't the place for it, if not mods feel free to remove it. I googled "Biggest insurance forum" and this site came up first on the list.

 

[Cornelius]

Try contacting your state department of insurance.

 

[marindependent]

Is this a real question?

 

[Aziz Saleh]

Try contacting your state department of insurance.

Thanks for the info, I was able to find it using "state department of insurance":

[EXTERNAL LINK] - Department of Insurance and Financial Services

Thanks again!

 

[marindependent]

Is this a real question?

It is a real question! Sorry - but there are a ton of spammers on here.

I believe Pacific Specialty Insurance was orginally a Broker and became an Insurance company. Just as a referance point.

 

[adjusterjack]

How does one become an insurance carrier?

One starts by studying the Michigan Insurance Code to learn the statutory and regulatory requirements that insurance companies are bound.

Michigan Legislature - Act 218 of 1956

Then one comes up with lots and lots of money to meet the financial requirements.

 

[Aziz Saleh]

One starts by studying the Michigan Insurance Code to learn the statutory and regulatory requirements that insurance companies are bound.

Michigan Legislature - Act 218 of 1956

Then one comes up with lots and lots of money to meet the financial requirements.

Thanks for sharing that link. Doesn't seem like the financial requirements are that bad:

[EXTERNAL LINK] - Michigan Legislature - Section 500.408

 

[mudhound]

Have LOADS of money

 

[InsuranceGuy29]

Consistently rob banks for about 60 years straight. You might have enough cash for an insurance startup. In all seriousness, you need a metric f**k ton of dollars to start a health insurance company, and the large and reputable carriers like Aetna, Humana, Cigna, and Blue Cross rule with an iron fist. They have EXTREME brand recognition, loyalty, and overall trust (at least in comparison to most of the others companies), and especially a brand new carrier no one has ever heard of.

I genuinely wouldn't advise trying to get into the insurance company business. It's EXTREMELY costly. People in this country absolutely DO NOT take care of themselves, generally speaking. They eat garbage, don't exercise, and rely on many toxic pills to try and fix themselves. Not saying all pills are bad, but many have extreme side effects that cause even more issues. Guess what people like this cost lots of? MONEY. Healthcare is not cheap. Hospitals, pharmaceutical companies, and doctors charge tons of money to take care of patients, and they're always trying to squeeze as much money as possible out of insurance and patients.

I understand it from their side, as it's certainly not cheap or easy to become those professions, and they take many years of sacrificing good pay and tons of time to go to school, get great grades, and their student loans are immense. That's the cost of high quality 1st world care. Otherwise we would be like the UK's National Health Institute (NHS) and their "free" (nothing is free) healthcare, and have every paramedic available striking due to high demand, extremely low government-mandated pay, and long hours. They're overworked, paid poorly, are miserable, and that's not the kinda folks I would want working on me. But I digress on that side quest.

Contrary to popular belief, most insurance companies actually aren't rolling in dough. Sure many will make a good profit, but many also do routinely pull out of markets due to losing too much money (like Bright Health recently), and some do even go bankrupt. Generally speaking, the premiums collected from clients aren't enough to pay claims out, in total. They need to invest (and invest well) and that money is then used to pay claims. That's called "the float."

As I said before, the major reputable carriers have been around a LONG time and they have this stuff locked down to a science. Newer carriers need to market HEAVILY, and that takes tons of money, and LOTS of time/years. You need to create extreme brand trust over the course of many years, and not sure if you noticed, but we live in a society of extreme suspicion and distrust, especially of major global corporations. Not trying to be discouraging about it, but it's just reality. Me personally, I wouldn't put my healthcare in the hands of a newer company.

 

[Al3x Lee]

I have been pondering and googling this for a day and can't seem to get a handle on how one can become one, the startup costs associated with it, and general information on how to start your own insurance company.

What kind of insurance would the company be selling?

I know a story of someone who owned an MGA with his dad. They were both CIC and CPCU designated professionals with decades of experience in the industry and wildly successful with their MGA.

The dad had a dream of starting an insurance company. In his older years, after a lifetime of success in the industry, he achieved his dream and started the company. It was called Cascade National Insurance.

That company ended up becoming a huge curse. Even someone as experienced as him couldn't keep the company afloat. The number of bad actors and fraud you face as an insurance company is unfathomable.

Despite the large quantities of money flowing through an insurance company, things can go south in a hurry. You're also at the mercy of your states insurance department and legislature.

In the end the company became insolvent and the owner lost a fortune.

Anyone who wants to start an insurance company should read something like this https://insurance.wa.gov/sites/default/files/documents/Casc.pdf

It outlines some of the facts that caused the company to become insolvent.