Posted by: Jan 02, 2023

How to Start an Insurance Company in Texas

Insurance companies are an integral part of the economy in Texas. Without insurance companies, the risks of everyday life would fall on an unfortunate few individuals. Insurance helps us have peace of mind that our businesses, property, and even our families will be financially protected after an unforeseen tragedy strikes. 

By starting an insurance company, you will be helping Texans thrive. You will also be joining a potentially lucrative industry. However, starting a business takes hard work and dedication, particularly in the insurance industry.

At the Curley Law Firm, we know the legal ins and outs of starting a business. We help aspiring entrepreneurs get their businesses started on the right track. Before beginning your journey, it is crucial to understand how to start an insurance company in Texas. Contact us today.

Requirements to Start an Insurance Company

Texas has a strong interest in protecting insurance customers from fraud and other illicit behavior. As such, there are some requirements people who wish to sell insurance must meet. Anyone who sells insurance in Texas must be licensed. To get a license, applicants must pass a state-mandated test and submit an application.

Part of the insurance agent application process in Texas is a criminal background check. The state can deny an applicant a license if they have been convicted of a felony, engaged in fraudulent or other dishonest activities, or engaged in other conduct specified by the Texas Insurance Code. A conviction is not a guarantee that your license will be denied. An attorney can help with any specific questions about the background check requirements in Texas.

Steps to Start an Insurance Company

If you have decided to start an insurance company in Texas, there are several steps you should take. These steps will help you start your business on the right path.

Research the Market

Market research is one of the most crucial aspects of starting a successful business. The insurance industry is fiercely competitive.

During your research, you will want to answer questions such as: 

  • What is the size of the market I am targeting?
  • Who is the competition?
  • Is there room for more competition?
  • How quickly will the market grow?
  • Is there a geographic location or niche market that is underserved?

Come up with a list of every relevant question you can think of. Answer these questions honestly and to the best of your abilities.

Come Up with a Business Plan

After your initial research, develop a business plan for starting a Texas insurance company. A business plan will provide a roadmap for your company’s formative years. Your business plan should include the following:

  • An executive summary,
  • A description of the company,
  • A list of insurance products,
  • A financial plan with varied projections,
  • Any funding needs,
  • The management structure of the company,
  • Major stakeholders,
  • Market analysis, and
  • Market research.

A written document with this information will help you guide your company through its difficult initial stages. It will also help you attract investors if necessary.

Choose a Legal Structure

The next step is to choose the best legal structure for a Texas insurance company. You should select a structure that best suits your needs. An insurance company can take on the following structures:

  • Sole proprietorship,
  • Limited liability company,
  • C-corporation,
  • S-corporation, or
  • Partnership.

Choosing a legal structure is a vital decision for the success of your business. Consulting a Texas business attorney will help you make the choice that best suits your goals.

Register Your Company and Get a Tax ID

Registering your company with the state is necessary for the business formation process. Part of this step is carefully choosing and registering your company’s name. You will also need to register the company with the state for tax and regulatory purposes.

You must get a federal tax identification number to pay taxes and hire employees.

Obtain All the Necessary Licenses and Permits

Before beginning operations, you must obtain all necessary licenses and permits for insurance companies in Texas. Your business must meet all federal, state, and local licensing and permitting requirements to operate legally within the state.

Open and Operate Your Company

Once you have completed the previous steps, it is time to open and operate your business. It is essential to keep up to date with all rules and regulations for the insurance industry. 

The Curley Law Firm Can Help

Whether you need help getting started or are already up and running and have a legal question, the Curley Law Firm knows how to help. We understand that getting your company started on the right foot, both legally and operationally, is an essential element of success. At the Curley Law Firm, we have experience in a broad range of business matters and use a client-oriented, results-driven approach. Contact the Curley Law Firm today so that we can help you with your business’s legal needs.