This post is an essential introduction to starting your own insurance broker business. We will focus on the regulations you will need to meet to trade as an insurance broker, while providing some tips on how to build your offering to attract clients.
What Do I Need To Start an Insurance Broker Business?
To succeed as an insurance broker, you will need:
- Insurance Experience – The best brokers have a deep understanding of the insurance market. Formal qualifications will help, but nothing will beat years of experience working in the sector, either for an insurance firm or for a broker. This will include deep knowledge of the compliance and other regulatory requirements you will need to meet.
- Product Knowledge – Depending on the type of businesses you want to work with, you will need to develop, and demonstrate, detailed product knowledge that’s relevant for your sector.
- Sales Experience – The better you can demonstrate a strong track record of success, the easier you will find it to attract customers when you establish your own insurance broker business.
- Business Knowhow – If you have never run your own business before, there will be a lot to learn when it comes to record keeping, recruitment, accounting, marketing, and more.
Registering an Insurance Broker Business
If you want to start an insurance broker business, you can either operate as a sole trader, or as a limited company. There are pros and cons to each option. To help you decide which is best for you, here’s a good introduction to the advantages and disadvantages of each route.
It is relatively straightforward to register your business, whether you do so as a sole trader or a limited company. In either case, you can do so online on the UK Government’s website:
What Regulations Will I Need to Meet as an Insurance Broker?
The UK financial services industry is largely regulated by two bodies:
- The Prudential Regulatory Authority (PRA). The Bank of England’s PRA regulates and supervises the work of insurance brokers, as well as other financial services.
- The Financial Conduct Authority. The FCA sets the strict regulations that you will have to meet if you want to work as an insurance broker.
If you want to start an insurance broker business, then you will need to get approval from both the PRA and the FCA. As it is a lengthy process to get approval from either body, it’s worth applying to both at the same time.
Each of these regulatory bodies will expect to see a detailed business plan, so make sure you have this ready before you begin. You’ll find resources to help you write your business plan on the UK Government website.
How To Become a PRA Approved Insurance Broker
There are a number of steps to the PRA application process:
- Pre-Application – A meeting with the PRA, during which they will explain the application process, and help you prepare.
- Initial Meeting – At which you will discuss your plans with the PRA, so they can highlight any areas you will need to address in order to get approval.
- Feedback Meeting – An opportunity to present the PRA with a more detailed business plan, based on the feedback from your initial meeting.
- Challenge Session – A chance to finalise your business model before your final application, based on rigorous challenges from regulation specialists.
How Much Does It Cost To Get PRA Approval?
Depending on the complexity of your application, it can cost up to £25,000 to get PRA approval. You can learn more about the PRA application process through visiting their new firm authorisation hub.
You can start your PRA application process through emailing NewInsurerStartupunit@bankofengland.co.uk or calling 0203 461 8100.
How To Become an FCA Approved Insurance Broker
Becoming an FCA Approved insurance broker means you will have to meet all of the stringent regulations the FCA sets for the UK financial sector. So, to begin with, take the time to read the FCA handbook, to see what sort of regulations are in place.
Once you are ready to proceed, you can apply for your FCA licence online.
Getting authorisation from the FCA will not happen overnight. First, you will need to attend a number of meetings with the FCA, during which they will ensure you will be able to meet their regulations. This will involve submitting your business plan, your capital management strategy, and certain other documents.
The FCA will then advise you on your next steps, and you should get a response on their decision within six months. Please note that the total application fee for FCA authorisation is £25,000.
What Sort of Services Should I Offer as an Insurance Broker?
You might want to offer specialist insurance services to a specific industry. Or perhaps you want to help businesses and members of the public get the cover they need at the best price.
In any case, at Capacity Insights, we can help you stand out in a competitive market through diversifying your offering as an insurance broker. We have a range of bespoke products for insurance intermediaries, including:
- Travel Insurance – Offer your clients both focused travel cover and tailored top-up travel insurance products, including cover for medical expenses, personal possessions, dental treatment, personal accidents, missed departure, and more.
- Embedded Travel Insurance – Add bespoke insurance packages to your existing offerings to provide your customers with a seamless, convenient, and affordable route to getting the cover they need.
- Health and Dental Insurance – From comprehensive medical cover to round-the-clock access to dentists, we can help you offer your clients outstanding insurance products.
If you want to start your own insurance broker business, we can work with you to deliver tailored insurance solutions to help you make an impact. We’ll take the time to understand your clients’ specific needs so that we can place them at the centre of everything we do.
Our bespoke, schemes-orientated approach is based on data science insights, and it’s all backed by truly exceptional levels of customer service.
Learn more about our insurance services for brokers.