Mbrcatz's answer is irrelevant and incorrect for the UK (or most of the world for that matter) ..... you've hit the nail on the head, it's all about capital and you need tens of millions to do what you are talking about and the start up costs are HUGE... don't forget you'll need accountants, claims professionals, compliance and complaints officers etc etc BEFORE you can sell a single policy. I reckon you'd do better than a million in staff costs before you collected a penny in premium. (60 staff avg £50k a year..which is laughably cheap staff costing in the UK ins market... for 4 months = £1m)

You also need to be able to cope with a catastrophe from day 1...
an insurer has to be able to survive a 1 in 200 year event. That is.... what is the WORST thing that could happen (even if it happens only once every 200 years). In the case of travel it's usually a epidemic which traps a lot of sick people abroad.

How did the big guys start ? Good question..... most of them can trace their history back donkeys years and raised the capital by issuing shares (and increasing that capital over the years) or in the case of Lloyds forming a syndicate of indivduals willing to risk their personal wealth.

Remember you can't 'borrow' money to do this as a loan or loan stock doesn't count as capital (I won't get into Tier1 Tier 2 technicalities).

So forget all that nonsense about hiring actuaries and lawyers... your best bet would be to approach existing companies (or a Lloyds syndicate) with your idea and say ..... "how much do you want to carry this niche market risk". They have their own actuaries etc and as long as you presesnt a serious proposition in a professional manner they WILL listen to you and it won't cost you a bean. You may get a 'binder' type policy (i.e. a special one written just for you) which allows you to underwite risks (within certain parameters obviously) on their behalf. That way they take an awful lot (though not all of the start up costs away) if your business is successful then in 10 years you'll have enough of a track record to go to market and raise the capital to underwrite the business yourself.

I admire your ambition.... but trust me starting an insurance company from scratch is a non starter... not even banks do it, they buy existing insurers (RBS - Directline etc).

If you are really serious and you want to discuss further, drop me a line I'd be glad to point you in the right direction.

Well, first you do the feasability studies, hire actuaries and lawyers to write the policies and determine rates.
Then you submit the business plan to your insurance commissioner for review, and your financials to prove you can pay the claims.

First off you'll need a few tens of millions of dollars to satisfy any regulatory body's requirements that you'll have enough capital to handle initial claims. Second expect to never make a profit and to go out of business within a few years. There are two reasons that travel insurance companies exclude preexisting medical conditions. One: some conditions become aggravated by travel, however some people are going to travel no matter what the doctor says. However if they have to pay for that decision then they might be dissuaded from traveling. Your policy acts to take away that risk. Second: many people who have a condition that cannot be treated in their home country or not treated well in their home country would purchase your policy, travel to a country with better medical facilities, and then file a claim saying their condition acted up and they needed treatment. Once you pay out this claim others will follow suit until you either: a) raise your rates big time to cope with all the claims, your volume drops and you go out of business or b) the claims become more than your capital can handle and you go out of business.

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