How to make an insurance brokerage profitable

Undoubtedly, one of the objectives of insurance brokerages is to achieve the highest possible profitability. Selling more with less effort ensures the continuity of any company. Although there is already, for example, insurance software that optimizes the revenue-cost ratio of any sale, today we want to talk about this in more depth.

Is an insurance brokerage in Spain profitable?

It is not possible to determine whether an insurance brokerage is profitable in Spain without having more information about operating costs, market competition and the company’s business strategy. However, according to data from the Superintendency of Insurance and Pension Funds, the insurance market in Spain is competitive and constantly growing, which could indicate that there are opportunities for an insurance brokerage to be profitable.

How to increase the profitability of an insurance brokerage?

The first thing you should be clear about is the average cost of each action, task and sale. Differentiating by type of product, client and even task can help you to have a much more realistic view.

Once you have done this analysis, it is time to review which ones have a higher cost compared to the return on investment they achieve, and prioritize those whose effort vs. results are better.

How do I know if my insurance business is profitable?

First of all, you must answer the question: “Does my brokerage generate enough profit?

In other words, your income must exceed your expenses. Obviously, the greater the difference, the more profitable the business will be. In case it is still not profitable, you will have to prioritize those sales and tasks that bring in the most profit.

Calculate the profit

First, you will need to calculate the average profit margin from the sale of each policy. We recommend that you make a breakdown by type of product (health, life, home, auto, liability, sick leave…), in order to have a realistic calculation.

Next, make an estimate of the average sales of each product, to get even closer to a realistic calculation. You should multiply the average number of sales of each product by the profit margin they usually leave.

It is obvious that profit is one of the key factors when we talk about profitability. It guides us to prioritize some sales over others according to the cost of closing them.

Profit is calculated as the difference between revenue and total costs


Determine the investment

Now that you know what profits you can aspire to, you can choose to invest part of the profits, in order to get more customers and sales. This is certainly the second issue to consider and should be reflected in any brokerage business plan.

Some examples of investments usually made by brokerage firms:

  • Advertising: whatever the type, as long as the results can be measured
  • New employees: if necessary to address more tasks and serve more users
  • Operational and business asset costs

Is it possible to increase the profitability of a brokerage?

Absolutely yes. In fact, it is always possible to make your insurance sales even more profitable and scalable. Only in this way can your brokerage continue to grow.

It is important that your business has the ability to adapt to market changes and new trends.

Keys to improve insurance profitability

The first thing to do is to identify your brokerage’s most profitable channels and sources. Once the main sources of income and other benefits have been detected, it will be time to establish an action plan focused on each of them. The idea is to maintain the ones that bring us more profits and act on those that are stagnant or generate losses.

Some more specific points to keep in mind are:

Keep a detailed control of your expenses

As in all areas of a company, it is highly recommended to keep an exhaustive control of the expenses, to have a control so that they do not exceed your income. These expenses can be the resources that are destined to the business or production processes, including both online and offline advertising.

Improve your profit margins

As we have already said, the profit margin is the difference between the selling price of the product and the cost that you have to assume until the sale is closed. The two most common ways to increase margins are:

  • Increase prices
  • Optimize costs and timing

Consumers will accept a price increase as long as it is competitive with other offers in the market and provides added value.

Manage your resources better

Nobody likes to waste resources. Resource management is about profitability and efficiency. Our recommendation is that you use, for example, tools that help you optimize time and operating costs, such as a good SaaS for insurance.

Study the profitability of your customers

To find out if a customer is profitable, we first have to determine what a profitable customer is: a customer with whom we obtain a revenue stream that exceeds the costs we have to face with him.

Of course, we must also take into account the medium- or long-term profitability that a customer can bring us. If the commercial relationship is prolonged (renewing with our brokerage) or we manage to get them to take out other insurance policies with us (cross-selling), the profit we make with this client shoots up, so retaining insurance clients is positive.

Issues that make a client profitable or not

  • If he pays in installments
  • If he does not make us invest too much time in attending him
  • If he decides to sign up quickly
  • If he decides to take out more insurance with you

Carry out a cost study

Why is it useful to carry out a cost study for an insurance brokerage?

Because it is possible to:

  • Increase profits
  • Improve the company’s processes (production, logistics, shadows, purchasing…)
  • Plan the reduction of the company’s costs
  • Determine a tailor-made budget

Offer value-added services

Offering a complete customer experience is essential to keep them satisfied, and as insurance brokers this is indispensable. Providing value-added services to your users is the perfect way to ensure a loyal customer base.

However, this is not always an affordable task for any brokerage. For this reason, we recommend opting for insurance sales programs that help you tackle tasks, close faster and serve more customers with less effort.

Hire an insurance CRM

Now you have an initial idea of how to make your insurance brokerage more profitable, knowing what costs to reduce to get the maximum profitability is an indispensable task in the company, both how to optimize resources or automate processes for selling insurance. These are factors that make you efficient and competitive.

If you liked this article and you have found what you were looking for, you may be interested in knowing some strategies to sell insurance.

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