Starting an insurance brokerage is the ultimate ambition for many brokers. Reaching the rewards of their efforts, having the freedom to choose which markets they work in, and building a business they can sell or pass on all make for an attractive proposition. So, how can you start an insurance brokerage?
In this latest blog from Coversure, we look at how to start an insurance brokerage. We’ll examine the four main paths – going it alone, becoming an appointed representative (AR), joining a network, or becoming a Coversure franchise holder – to help you decide which route is right for you.
Setting Up An Insurance Brokerage: The Options
- Going It Alone – historically, this is how new brokerages were founded. Experienced brokers would find some premises, get their FCA authorisation, approach their insurer contacts to open agencies, and start trading. While this is still technically possible, brokers are likely to find opening agencies with key insurers difficult. Additionally, the burden of running their back-office functions, keeping up with compliance changes, and carrying out effective marketing campaigns in today’s highly competitive marketplace makes this path challenging, to say the least.
On a positive note, those who do it alone enjoy the freedom of running their business as they see fit. Also, when it comes to executing their exit strategy, they will have a business they can sell.
- Become a Coversure Franchise Holder – Coversure has been helping entrepreneurial insurance brokers realise their dream of owning a brokerage since 1986, with a low-cost, full-service package of support.
The beauty of Coversure’s franchise model is that it offers the perfect blend of freedom and support. Franchising as a whole has proven benefits. What-Franchise.com recently reported that while 80% of new businesses fail within the first five years, 80% of franchised business succeed. Thanks to our extensive levels of support and our strong, widely respected brand, the typical Coversure franchise is in operation for over 11 years, with several existing offices having been trading successfully for over 20 years.
As a Coversure franchisee, you’re independent but never alone. Our comprehensive onboarding package means we can help you set up your brokerage in as little as ten weeks. You’ll receive help setting up your office, obtaining your FCA regulation, system training on Acturis, and gaining access to a range of A-rated insurers’ products.
Once established, you’ll be free to choose your target markets and shape your business as you see fit. Should you need any help, then our business development, compliance, and marketing teams will be on hand to give you all the assistance you need at no extra cost. On top of that, you’ll also enjoy the friendly support of our 90+ strong team of fellow franchisees.
Our philosophy has always been to help entrepreneurial brokers realise their dream of building a profitable business over the long term. To facilitate this, we’re there for our offices at every stage of the business’s lifecycle, from startup to selling up. When our franchisees decide they’d like to execute their exit strategies, we help them find a suitable buyer for their business.
- Becoming An Appointed Representative (AR) – becoming an AR is something of a halfway house between being an employed broker and being independent and fully regulated. ARs work with fully regulated firms (known as the ‘principal’) and sell their products and services. The regulated firm usually charges the AR a fee – this can be a monthly amount, an annual fee, or a share of the profits they make.
The advantages of becoming an AR are that you can receive FCA authorisation more quickly and the cost of setting yourself up as one is relatively low. AR models are varied, there is usually a framework that you must work within, you must adhere to processes and procedures that the principal sets out and often there are elements of the broking process that are conducted by the principal such as the placement of business with markets that reduces the level of operational control and independence
- Joining a Network
Joining a network is another option for those wishing to open an insurance brokerage. Networks offer access to insurers, compliance, marketing, and, depending on the network, some back-office services.
Networks can be a good solution, but their support can be costly and are generally utilised by more established businesses that need some element of independence. While the upfront fees can look competitive, dig a little deeper, and you’re likely to find that services such as managing client money and compliance are extra. Some networks can also be rigid in their working practices, which may not suit genuinely entrepreneurial brokers.
Where to start?
If you’re thinking of opening your own insurance brokerage, there are a few things worth considering:
- Are you ready for the challenge?
Being the owner of a successful insurance broker can bring impressive rewards. The average Coversure franchise, for example, has an income of over £200,000, but achieving that takes determination, hard work, and a focus on customer service. Are you ready for the challenge?
- What support will you need?
If you are looking for more freedom in your working life but don’t want to take on the responsibility of gaining full FCA authorisation, battling to set up insurer agencies, building a brand, and keeping up with compliance changes, then going it alone probably isn’t the path for you. Instead, you’d be better off joining a network or becoming a Coversure franchise holder.
- Do your research
Joining a network or becoming one of Coversure’s family of brokers is a potentially life-changing step, one that warrants careful consideration and research. As a starter for ten, ask yourself:
- What are the costs? Network fees can vary wildly, so make sure you look at each carefully before making a commitment
- What will you get for your money? Support levels can vary from basic to Coversure’s full-service model, so compare like with like before you make your decision
- Does it give you an exit strategy? The last thing you want to think about when starting a business is its end, but it’s essential to do so. If you’re looking to build a business that you can sell or hand on to a loved one, then it’s crucial to choose a suitable model. Being an AR or a member of some networks will only give you an income for as long as you work with them. Coversure’s franchise model and some other networks give you the freedom to sell your business as part of your exit strategy
- Talk To Those Who Have Made The Move
If you want to know what it’s like to open an insurance brokerage then talk to an insurance broker. If you were interested in becoming a Coversure franchise holder, we’d be happy to introduce you to one of our brokers who matches your background so you can hear first-hand what it will be like.
“I’ve always believed in seizing opportunities, and in late 2018 I felt the time was right. It was a little scary leaving a well-paid employed position, but I knew that with Coversure’s backing, I’d be fine.”
Aaron Hodson, Coversure Castle Donington
How We Can Help You Start An Insurance Brokerage
Like so many great things in life, starting a brokerage starts with a conversation. If you’d like to know more about how Coversure can help you, then call the team on 07833 471393 or make an enquiry. They’ll be happy to discuss what’s involved and take you through how we can:
- Get you started
- Helping you create a business plan
- Set up insurer agencies
- Assist you with gaining FCA authorisation
- Set up your IT and back-office functions
- Help you with marketing and business development
- Set up your branded office
- Help you grow your business
Like To Start An Insurance Broker? Call Coversure Today
If you’re thinking of opening your own brokerage and are looking for a cost-effective combination of freedom and support, then contact Coversure today. Unlike some other networks, as a Coversure franchise, you’ll own your business, you’ll have your own clients, your own insurer relationships, and be free to realise your ambitions. We can even have your office open in just a few weeks.
So, if you think you have the drive and entrepreneurial flair to become Coversure’s next success story, please contact us today for a confidential chat.