How to Start an Insurance Company: Capital, Licensing, and the Systems to Run It

To start an insurance company that carries risk (a carrier, as opposed to an agency that sells other insurers' policies), you need capital and surplus above your home state's minimum, a certificate of authority from that state's insurance department, rates and policy forms filed in each state you will write, reinsurance, and the systems to quote, issue, bill, and pay claims. Statutory minimums for a property and casualty insurer run from about $2 million to $5 million of combined capital and surplus in many states, and regulators can require more. BD Emerson's planning range is 12 to 24 months from a funded business plan to the first policy. Selling insurance instead takes a producer license and an agency, which is a far shorter path.

Carrier, MGA, or agency: which company are you starting?

Three different businesses answer to the name insurance company, and each has its own license, capital need, and system footprint. An agency sells policies that other insurers issue, earns commission, and needs producer licenses for its people; it carries no underwriting risk. A carrier, the subject of this guide, issues policies on its own balance sheet, so it needs capital, a certificate of authority, and a statutory annual statement filed with regulators. Between the two sits the managing general agent (MGA), which underwrites, prices, and often settles claims for a carrier under a written contract while the carrier keeps the risk.

The NAIC's Managing General Agents Act draws the line with numbers. An agent becomes an MGA when it writes gross direct premium equal to at least 5 percent of the insurer's policyholder surplus and also adjusts or pays claims over $10,000 per claim or negotiates reinsurance for the insurer. The model requires a written contract with specific terms, including monthly accounting and remittance and the timely transmission of electronic claim data, and it requires the insurer to review the MGA's underwriting and claims operations on site at least twice a year. A common route to market is to launch as an MGA writing on another carrier's paper, build a loss record, and form a carrier once the book justifies the capital. That route trades margin for speed, and it puts the systems question first, because the MGA has to report everything its carrier needs from the first policy.

How much capital does an insurance company need?

Every state sets a statutory minimum of capital (the money paid in for stock) and surplus (the cushion of assets above liabilities) for an insurer it charters, and the amount depends on the state and the lines written. The NAIC keeps a chart of domestic minimum capital and surplus for its uniform application, last updated October 16, 2025. Five examples for a property and casualty insurer show the spread:

The statutory number is a floor, and a new carrier rarely launches at it. California's entry says the commissioner has discretion to require capital and surplus above the minimums before admission, and New York's says a higher surplus may be required after review of the plan of operation. The NAIC's application instructions add that meeting the statutory minimum surplus "may not be sufficient for all applicants." In practice, the capital a regulator accepts is the amount that keeps the company solvent under the premium, losses, and expenses projected in its business plan, with room for a bad year. Premium growth consumes surplus, so a faster growth plan needs more capital or more reinsurance.

What does the certificate of authority application require?

A new insurer applies to its state of domicile, the state where it is incorporated, using the NAIC's Uniform Certificate of Authority Application (UCAA). The UCAA Primary Application is the version for a newly formed insurer. Its plan of operation has three parts: a narrative that carries the business plan, pro forma financial statements and projections on Form 13, and a questionnaire on Form 8P. The application asks for a three-year pro forma balance sheet and income statement and an NAIC Biographical Affidavit (Form 11) for the people who will run the company, and it must show that the company meets the state's minimum capital and surplus. Once licensed at home, the insurer files the Expansion Application to add states.

States add their own steps. The California Department of Insurance, for example, requires name approval, an organizational permit before the company raises its startup capital, detailed actuarial and financial projections, and a field investigation of the background of each officer, director, and key manager. Its plan of operation also asks for samples of the contracts the insurer will issue and a description of the accounting and bookkeeping system the company will use for its required periodic statements. That last item is where founders learn that the regulator expects the systems to be designed, with a named platform and a date, at the time of filing.

Rates, forms, and reinsurance before the first policy

A certificate of authority lets the company transact insurance. Selling a specific product also requires that product's rates and policy forms to be filed in each state, and most filings move through SERFF, the NAIC's electronic rates and forms system. Depending on the state and line, rates either need approval before use or can be used once filed, so the filing calendar sets the earliest launch date in each state. A new carrier often adopts bureau forms and loss costs for standard commercial lines and files its own rating for specialty products, which takes longer because the actuarial support has to be built from scratch.

Reinsurance is the other prerequisite. A carrier with $5 million of surplus cannot keep a $5 million limit on a single risk, so the business plan has to show how quota share, excess of loss, or both will cap what one risk or one event can take out of surplus. Reinsurers price that protection on the underwriting guidelines, rating, and claims handling they can audit, which is one more reason the operating systems have to exist before the first policy is sold.

Which systems does a new insurance company need on day one?

A carrier needs a policy administration system to issue and change policies, a rating engine to price them from the filed rates, a billing system to invoice and collect premium, a claims system, document generation for policies and notices, and an accounting and data layer that feeds statutory reporting. An MGA needs most of the same, plus bordereaux reporting to its carrier and reinsurers. For a new company these are one decision, because they share one data model: a policy issued in the policy system has to rate correctly, bill on the right schedule, and land in the statutory statements without manual rework.

There are two ways to get there. The first is to license a vendor suite and configure one line on its prebuilt bureau content; our policy administration system guide puts that at 3 to 9 months for one line, and our comparison of core system vendors covers who sells what. The second is to build a core the company owns, which takes 9 to 15 months for the first line and makes sense when the product itself is the competitive edge, such as a specialty line the bureau content does not cover or a pricing model the vendors cannot run. Our recent insurance work includes platforms that enabled the launch of two new insurance companies in less than a year each.

How long does it take to start an insurance company?

BD Emerson's planning range is 12 to 24 months from a funded business plan to the first policy for a single-state property and casualty carrier. Three tracks set the date. The regulatory track, from UCAA filing to certificate of authority, depends on the state's review and on how complete the application is when it arrives; California describes its own process as "detailed and time consuming." The product track adds rate and form filings, which move faster in file-and-use states than in prior approval states. The systems track, 9 to 15 months for a custom core's first line or 3 to 9 months on a configured vendor suite, can run in parallel with the other two from the day the business plan is funded.

Launches that slip usually sequence work that could have run in parallel. The common patterns are raising capital before anyone has chosen the platform, starting the build after the certificate of authority arrives, and discovering at the first quarter-end that billing cannot produce the receivables aging the statutory statement needs. An MGA launch on an existing carrier's paper skips the certificate of authority but adds the carrier's own approval process and the reporting duties written into the MGA contract, so BD Emerson's planning range for an MGA program is 6 to 12 months.

BD Emerson builds the policy, billing, and rating systems a new carrier or MGA needs as a platform the company owns, and we build a working prototype of the first product before the company commits to the full build. Our insurance core platform page explains how we build that platform for new carriers and MGAs.