How to Build a Financial Plan for Your Insurance Agency

Insurance Agency Financial Planning

As an agency owner, you have a lot on your plate. You probably still sell plenty of your own policies, but you’re also managing other agents and employees to keep your operations running smoothly. 

You also probably spend a decent amount of time analyzing the finances of your business. A financial plan helps you track your finances throughout the year, each quarter, or even each month so you can be assured you’re on the right track, or you can make changes when necessary.

Why does my insurance agency need a financial plan?

Ameriprise Financial identifies five reasons every business owner should create a financial plan each year:

  • Managing taxes. There are so many tax incentives for businesses, so knowing where your business sits can help you identify those. Not to mention, having a solid plan and tracking your performance against that plan will help when it comes time to file taxes each year.
  • Retirement plans and other employee benefits. What does your retirement look like? How are you compensating your employees or offering them benefits? A financial plan is crucial to answering these questions.
  • Business valuation. Understanding what your business is worth and taking that into account with your personal finances is important to get a clear picture of your entire financial picture. This information will help you continuously create financial plans each year.
  • Business succession planning. What’s your plan for your agency once you retire? Sell it? Pass it on to a family member? Having a financial plan each year and seeing how you track against it will aid in deciding what to sell your business for, and you’ll have adequate information to share with your buyers.
  • Business protection. As an insurance agent, you can definitely understand this one. You need to know how much your business is worth and how it’s growing to understand exactly how to insure it.

So, you can see that your insurance agency should be building financial plans each year, or, at least, updating it year over year so that you can plan for future events and continue to run your current operations with confidence.

What do I need to build a financial plan?

There are two important things you need when building a financial plan:

  • Advisors
  • An agency management system


I don’t necessarily mean a financial advisor—maybe you’re one yourself. What I mean is that you need a team of people (1-3) that you can go to with questions or that can counsel you on areas of the financial plan that you’re not sure what to do with.

This team of people should be people you have known for awhile, that you trust, and that know your business.

Agency Management System

You’re probably thinking, what does this have to do with creating a financial plan? Well, an agency management system (AMS) is where you’re storing all of the information about your agency, and that information is vital to building a financial plan. If you’re still storing your book-of-business on paper or in Excel spreadsheets, I would recommend moving to an agency management system before you can really build a comprehensive financial plan.

[Free eBook] 5 Steps to Choosing an Agency Management System

So, what kinds of information do you need to extract from your AMS for financial planning? You’ll need to know at least the following information:

  • Current commissions coming in from your policies
  • Projected commissions for the next year (this will essentially be your sales forecast)
  • Top selling products (life, health, disability, dental, etc.)
  • Groups, individuals and policies by lead source

AgencyBloc's Dashboard Analytics: Groups & Policies

AgencyBloc’s “Groups & Policies - BY LEAD SOURCE” Dashboard Graph

These four pieces of information allow you to analyze where your business currently sits financially and where your business has historically been most profitable so you can build realistic goals on where you’d like to be in a year.

What should my financial plan include?

After researching what some insurance agencies have included in their financial plans, I’ve identified three areas that should be covered in your financial plan:

  • Break-even analysis. A break-even analysis is important for any business no matter how many years you’ve been in business or how much profit you’ve accumulated. It’s the basis that you’ll build financial goals off initially, so it should be included. Mplans gives an example of break-even analysis.
  • Projected commissions (sales forecast). This part of your financial plan will show what you expect to sell in the next year and how that affects your budget/overall plan. Like we touched on before, you’ll need to be able to project your commissions (AgencyBloc can do this) in order to do this. You’ll also take into account what has sold well in your agency and where you’ve found the best leads historically to build your future plans.
  • Marketing budget. This is a vital part of your insurance agency’s financial plan because marketing is vital to any and all businesses. These expenses include direct mail expenses, promotional items, and any third-party software you use like email marketing software (if it isn’t already built into your AMS—AgencyBloc includes email marketing capabilities within it) or lead-buying software (like NextGen Leads).
  • Overall expenses. This is the rest of the expenses beyond marketing efforts that you insurance agency plans to endure. These include rent, utilities, payroll, and any other operating expenses.

Financial Plan Examples

Building a comprehensive financial plan if you never have before can be a daunting task. Examples always help in these situations. Here are a few I’ve found:

Some of these examples might be more detailed than you’re looking to get, but they provide a good outline.

The Bottom Line

If you take anything from this blog, take this: your CRM data and commissions data are precious, and you need ways to constantly analyze it. Real-time graphs and charts within your agency management system are the best way to get an overall picture of how your agency is currently performing and how it’s tracking against your goals. And to create solid financial goals for your insurance agency, the ability to project commissions is a must.

The Agency's Guide to Commissions Processing

Kelsey Rosauer

By Kelsey Rosauer on March 18, 2016 in Productivity

Kelsey is the Marketing Brand Specialist at AgencyBloc. She plans and creates educational resources to help our customers organize, automate & grow their insurance agency. Favorite quote: "I am convinced that life is 10% what happens to me and 90% how I react to it." —Charles R. Swindoll  More articles


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