In an article written for youTalk-insurance, CEO of Momentum Broker Solutions Howard Pepper shares some useful thoughts and insight for people thinking about starting an insurance broking business.
So, you’re thinking of setting up an insurance brokerage. You’re an experienced account executive or an insurance professional with an eye for a great business opportunity. Whatever your reasoning, it’s time to take the FCA by its handbook and choose your route to market.
Yes, you could become Directly Authorised (DA), wait months for FCA approval and pay a lump sum for the pleasure. You may have substantial capital resources available from the off to satisfy regulatory adequacy requirements.
You might want to set up your own governance systems and controls from scratch while building your insurer agency base and sourcing an appropriate IT system.
Oh, and you may have already got your head around FCA reporting and fees while sorting out admin such as PI insurance and marketing. Alternatively, you could save yourself a lot of time and stress and become an Appointed Representative (AR).
Start at the beginning
From day one, you’ll have professional support to get your business up and running quickly. Whether it’s putting together a business plan or budget, working on your brand or setting up a scheme, there will be someone to answer your questions and support you.
We’ve got your back office covered
When you’re setting up your insurance brokerage, you must put in place a robust structure that will support growth, satisfy customer needs and future-proof your business. Of course, you can pull together all the different strands yourself, or as an AR you can save yourself time and money by using tried-and-trusted services already in place.
An experienced back-office team will deal with your broking and other admin requirements such as broking policies, setting up client records and dealing with changes during the policy term. They will also deal with financial matters like client-money handling and insurer reconciliation.
As a new player in the world of insurance brokers, building a good reputation is key to your success. Having an efficient IT system in place, which enhances the service you give to both customers and insurance companies is essential. Insurance is now digitally driven – your IT system should reflect this.
There are many out there, but as an AR with Momentum, you’ll benefit from using a market-leading insurance broking platform: Acturis. It’s a straightforward, effective platform with e-trading capabilities designed to meet the requirements of your business.
Regulation
Without a doubt, the most important and daunting aspect of entering the insurance market is making sure you meet and maintain the regulatory requirements of the FCA. This is no tick-box exercise; it’s a constant round of keeping up to date with changing regulation, fees and reporting. Getting authorised to do business can take months, and without professional expertise, it will take a lot longer.
Being an AR moves the regulatory burden from you, the broker, to us, your Principal. Compliance advice is just a phone call away. You’ll get advance notification of any changes in regulations which may affect your business, and we’ll provide you with a governance framework which satisfies FCA requirements.
As an AR for Momentum, you’ll also benefit from:
- a shorter authorisation process as we are already FCA approved
- no authorisation costs
- no capital requirement
- no FCA reporting responsibilities – these are down to us
- no hefty FCA or FSCS fees
Help to grow your business
If you go down the DR route, it will take time to build up your brand and reputation, as well as relationships with insurers. As an AR, you’ll already have this leverage, and fast growth is a reality, not a pipe dream. The collective bargaining power of our network means small firms like yours will be able to secure better deals for your customers.
You’ll also have access to agencies and insurers you wouldn’t necessarily have if you were DA. And our team of expert brokers will place your business with insurers offering the products your customers need at prices you’ll like.
Do you have what it takes to be an AR?
The AR model can provide you with a faster route to success, but not by cutting corners. There are a number of qualities which are crucial to your success: Insurance experience and a proven track record of delivering service in your chosen field, as well as a solid understanding of FCA requirements and the technical knowledge necessary to advise your clients.
The rewards can be great but starting an insurance brokerage is never an easy option. Making your business successful will require commitment and drive.
So, are you ready for the challenge?
If you would like to talk to Momentum Broker Solutions about the issues raised in this article, CLICK HERE, leave a message and youTalk-insurance will pass your enquiry on