The malpractice insurance company business plan needs to accomplish several things to pass muster in the lending or capital raise arena. First, it should define the type of malpractice coverage you will offer in as much detail as possible. Are you going to be working with law firms, medical clinics, accounting firms, etc., or with freelance individuals who need coverage for their business dealings? Will you cover any type of malpractice contingency, and what rates will you offer to prospective applicants? Do you envision offering parallel coverages like D&O, E&O, or other executive packages in the future? You need to address these topics and all of the following:
• What is the market need for malpractice coverage in your practice area?
• Will you target mainly firms in a certain region, and if so where?
• Which insurance agencies/providers pose the most direct competitive threat to you?
• What staffing needs do you have and what is the ongoing compensation plan that you envision?
• Is there an exit strategy that applies to your insurance company?
The malpractice insurance agency business plan should also include a detailed financial pro forma showing your projected revenues and expenses over a period of (typically) five operating years. If your firm is already in business and has been writing policies for 2-3 years, create a past performance table/graph detailing your successes to date, and note any important growth trends or aberrations. For the pro forma, be sure to include all of the standard metrics and tables like revenue forecast, profit and loss statements, cash flow, balance sheet, and break-even point. Also show the precise use to which you will put the new capital and the sort of repayment or equity scenario you envision (IRR). If you want help building this model or need to outsource the market analysis to business planning professionals trained in the insurance industry, call MasterPlans.com today: 877-453-2011
