Starting an insurance brokerage.

Many people are welcoming the opportunity to use their skills and experience to build their own insurance brokerage; to take control of their future and truly benefit from their efforts.

As with any new business, starting your own brokerage requires planning and there are several things to consider. What will make this a viable option for you?

What you need

Insurance experience

You will have built up experience over a number of years within the industry. This may be directly working for a Broker or Insurer or associated businesses which have provided you with the level of experience needed to provide good and proper advice to your clients. As an FCA regulated industry it is essential that you can demonstrate a track record of providing service in your chosen field.

Technical knowledge

While it is not a requirement to have formal qualifications (but of course it does help), it is essential to demonstrate that you have the level of knowledge necessary to provide technical advice to your client. This will vary depending upon the type of business you want to transact but a reasonable level of technical and product knowledge is a prerequisite.

Sales track record

You will need to have a track record of dealing with insurance buyers. To build a successful business you will have been able to build strong and trusting relationships with your audience and therefore the ability to build your client base.

Commercial awareness

Building your own business requires a basic level of commercial knowledge. This might be the first time you have had to deal with running your own business and although working within a commercial environment will have armed you with good financial knowledge, you will need to be confident in your ability to make commercial decisions. Access to business support and mentoring can be very helpful in the early days of setting up your business, and there are lots of useful places for you to go to for support.

Compliance knowledge

General Insurance is regulated by the FCA, so it is essential that brokers operate in a compliant manner. Whether you choose to go down the Directly Authorised or Appointed Representative route knowledge of the FCA requirements is essential. There is a broad range of support services available, online training and development and industry bodies can all help you to ensure that your knowledge remains current. The Chartered Insurance Institute is a great place to start.

Commitment and drive

It goes without saying that making your business successful will require commitment and drive. As with any new enterprise a considerable amount energy is needed and the amount of time you will need to invest should not be underestimated – the rewards can be great but starting your own business is never an easy option.

Despite being a member of a network previously, we have wider access to insurers and we are more competitive with Momentum.
– Paul Nix, Towan Insurance Brokers

How to Set Up Your Brokerage

So, you’ve decided to take the plunge. What next? There are two basic ways of setting up an insurance brokerage either a sole trader or a limited company. There are pros and cons to each option and lots of advice is available to help you choose which option is right for you.

Setting up a limited company is an easy process and can be done online at minimal cost. There is an excellent Companies House guide which will take you through the process. If you are setting up a company it should be noted that if the word Insurance is in your name, for example ABC Insurance Brokers Ltd, this is regarded as a sensitive name and will require FCA approval before Companies House will register it. Your chosen name will also need to make it clear that you are not an insurer so if you want to include ‘Insurance’, you will need to include ‘Broker’, ‘Services’ or something similar.

Every business needs a plan. This does not need to be a long and tedious document – after all it is what you do that is important and the best plans in the world will not lead to success unless the execution is good. However, the thought process; how are you going to get business, researching your market and competitors, planning your campaign, marketing/networking etc. is important.

Understanding your cash flow is vital. In starting your own business, you may be exchanging the certainty of a salary for the unpredictability of what business you will win. Your planning should help in establishing when revenue is likely to come through, however it is important that enough allowance is built into your projections to allow for the lack of certainty. The cash outlay involved in forming an insurance brokerage will need to be closely monitored and be influenced by the model you choose Directly Authorised or Appointed Representative. There are lots of helpful sites available containing lots of advice to get you started with your plan including Gov.uk, Princes Trust and Start-up Donut

FCA Authorisation.

There are two basic routes to FCA authorisation: Directly Authorised and Appointed Representative (AR)

In the past becoming Directly Authorised was the usual route to starting an insurance brokerage. However, following the lead of the Financial Services sector where the AR model is widespread, there has been a significant rise in the number of ARs amongst the General Insurance sector. In fact, this model is widely acknowledged as an alternative to the more traditional approach and a growing number of businesses have made this their preferred route.

“The Momentum model is a great opportunity for us to work on quality business from community brokers, and because everything is handled by the Momentum hub, the process is quick and efficient – it’s the best of both worlds for us. It’s really exciting to work with a partner broker in a different and innovative way.”
Jason Howes, Regional Manager, Allianz

“Momentum is a great trading partner for Ageas. Over the past couple of years, we have developed a close working relationship that has translated into a growing book of profitable business. The Momentum model is incredibly valuable to us, it gives us access to some skilled and experienced brokers around the country that otherwise might not have been on our radar.”

David A Scott, Commercial Trading Manager, Ageas

How Momentum will help you to start an insurance brokerage

From day one, you will have professional support to get your business up and running quickly.

Whether it is 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 have got your back office covered

When you are 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. With Momentum, 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 insurance placement, 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.

You will also benefit from using a market-leading insurance broking platform: Acturis. It is an effective platform with e-trading capabilities designed to meet the requirements of a commercial insurance business.

The Momentum proposition has continued to evolve over the last few years to provide all encompassing support for our broker partners including

  • Access to more than 240 insurer agencies
  • A broking team with the expertise and strength to manage the increasingly difficult market
  • Exclusive placement solutions and enhanced earning potential
  • Consistent and significant investment in systems, including Acturis
  • Claims management support
  • A marketing team dedicated to helping you win and retain clients