If you are thinking about setting-up your own Insurance Broker via TEn, then, necessarily, we would expect you to have had strong prior experience within the insurance industry.
For example, having held the position of Account Executive at another Broker.
Alternatively, you may have worked for an Insurer/MGA, or, perhaps you have run your own broking business in the past; or some such similar background.
Indeed, we recommend at least 5 years experience in the industry before you set out on your own, or plan joining a network such as ours. More than 5 years is obviously better.
Ideally, you would also have gained some Chartered Insurance Institute (CII) qualifications over the years and you will hold a CERT, a DIP, or even an ACII.
However, we equally appreciate years of experience. So, the lack of qualifications is not a show stopper, provided you commit to our e-learning and CPD regimes going forward.
And yes, you really have to do it too.
Starting your own business involves you becoming an entrepreneur; self-motivated and self-reliant. It may be that you will be working from a back bedroom for the first couple of years. So, be prepared for a reality that can be lonely at times.
And last but not least, you must be financially and emotionally ready for a lean first year, during which time most people will need to observe a restrictive covenant.
Therefore, 12 months of chasing new business is generally your only option.
Now, assuming you are not dissuaded about the venture, please read on.
To consider seriously starting your own broker, you need to have first created a 3 to 5 year business plan, to outline the scope and ambitions for your business.
You should also profile your audience, competition, sales plan, promotion and marketing strategy as well as any set-up costs you may incur. This Business Plan, together with a CV per proposed director and completion of a TEn Application form, is the initial documentation that TEn will need to progress your application.
You may also want to take some legal advice if you have a restricted covenant, before leaving your employer and if you hope, ultimately, to bring your book of business with you.
Even if your honest intention is to not approach anybody until 12 months have elapsed, nevertheless, some organisations believe that clients belong to them in perpetuity. Consequently, can make trouble for you, even though they cannot possibly win.
Unless moving clients is formally agreed with your former employer, then it should NOT be attempted. Twelve months is a short enough time for your clients still to remember you.
There are two options to consider in respect of becoming a regulated Insurance Broker. The Appointed Representative (AR) route and the Directly Regulated (DR) one.
As a start-up - and often way beyond - many people prefer the AR model for its simplicity.
How does the AR model work?
As an Appointed Representative, you become an approved person/company, running regulated activities and acting as an agent exclusively for a Principal company (like TEn Insurance Services or any other insurance network).
The Principal company effectively sub-regulates you and ensures that you comply with FCA directives. Thus you will be subject to some network specific rules, audits and checks, as part of the standard set of industry regulations.
As an AR, you are part of a network that looks after the back-office operations of a traditional insurance broker (insurer relations and negotiations, regulation, accounts reconciliation, IT support) which frees you up to service the client and focus on new business.
Since TEn is not a franchise business, you are not committed to targets. Do as little or as much business as you like, as long as it suits us both (within reason).
One rule we will always stand by is the ownership of clients. Clients will forever and always belong to the broker, not TEn’s, not ever. This is not always typical of other broker networks but we feel that this keeps us above the rest.
What kind of business can I do as an AR?
TEn is suited to both SME and larger clients businesses. We handle whatever comes, although most clients pay annual premiums between £2,500 and £10,000.
Historically, we have handled winds farms in India and diving contractors in Iraq and all sort of other unusual stuff.
At the time of writing, our Members collectively can count very many clients paying in excess of £50,000 p.a. and a few dozen in excess of £100,000.
There is one Commercial client paying premiums just in excess of £0.5m annually and another that is fast approaching £1m. Our largest HNW Private Client pays almost £100,000 each year.
So, we can accommodate a whole range of client sizes.
Can I become Directly Regulated after being an AR?
Yes, you can. A number of ARs use TEn and the AR model as a springboard to direct regulation when they have outgrown a network or have reached a suitable size to employ enough people to do all those things the network does for them.
In many ways, we regard this scenario as excellent marketing and a recommendation of our services. We only ask that people do not plan this outcome from day one and depart at the end of the minimum period.
This has happened perhaps a dozen times since we started and we do whatever we can to help during the transition and, indeed, sometimes retain a business relationship with the departed in respect of some of their clients and risks.
However, we don’t believe that it makes economic sense for any AR to think in these terms until they have reached a GWP level of at least £5m or more. We retain or have retained ARs at more than double that.
Similarly, we have many established brokers join the network as an Appointed Representatives if they are struggling to compete or want to alleviate the pressures of direct regulation.
Can I develop market relationships and talk to insurers?
Yes, although in 95% of cases, TEn will already have a relationship with the relevant insurer and we have our own Insurer Relationship & Placement Manager, who gets to go to the Golf Days.
All TOBAs are necessarily between each insurer and TEn.
Over the years we have evolved 175+ insurer relationships. These span across the large composite and medium sized insurers, as well as smaller MGAs and niche players; plus a number of London Market underwriters.
As a small solitary broker, your support of markets would be spread rather thinly, whereas TEn, as the aggregator of many books of business, we can leverage the collective buying power and rally support from almost any insurer.
Together we achieve better levels of service, more competitive rates and higher commission levels, than you could otherwise achieve on your own.
Also, it’s just worth bearing in mind, that as you reach retirement and, potentially, sell your book of business to another ARs, then there are no agency transfers needed; all are covered by the TEn TOBAs. This makes it a very frictionless sale.
TEn enjoys enhanced service levels with many of our insurer partners. Indeed with some of them, we are part of their exclusive Club arrangement, such as the Aviva Club 110 or NIG First.
As of now, our number of market TOBAs stands at about 175-200. That said, approx. 75% of our business is with 25 of them and 75% of the balance is with another 25. This leaves the remaining 5% with up to 150 niche markets.
This means that if you have clients with anything specialised to be placed, we probably have the insurer to do so. Carbon Fibre fishing rods being one such example.
And, depending on the nature of the arrangement you have with TEn, we do allow some brokers to speak to insurers under controlled conditions, including proper use of systems and call recording.
How long am I tied in for?
There is a minimum contract term of 18 months, this being 15 months of initial commitment, followed by a notice period of 90-days at any time after that.
We believe that the TEn Appointed Representative model will work out well for most Members. In which case, they will continue to support the network without any onerous contractual commitments of longevity being imposed.
We are practical people. If for some reason, the arrangement doesn’t suit a particular Broker, then it is totally pointless to have everybody locked into the relationship for several years.
How am I regulated as an AR?
As an appointed representative, the principal firm (that’s TEn) regulates all its ARs in the network, we also pay any FCA fees as well as carrying out frequent audits by our own compliance staff.
However, there are some costs associated with on-line learning which you need to pay for yourself and you MUST achieve a certain number of hours learning per year.
You do not pay FSCS or FOS fees either, nor worry about solvency margins.
The FCA has put the AR model in the spotlight, since its 2016 Thematic Review of Principals and their Appointed Representatives in the general insurance sector.
So, during your time with us, you will be subject to various checks to make sure you are continually fit for purpose and doing the right thing to remain compliant.
On that note, TEn is NOT an “easy” option for those individuals or firms who have had difficulties with direct regulation in the past. TEn is as concerned as anybody else should be about TCF, Contract Certainty and everything else.
We do a full range of Experian checks before anybody is appointed and, arguably, our ears are closer to the ground in some respects than the FCA and we believe that is much more likely to spot a ‘bad apple’ early.
Appointed Representatives are responsible for chasing their own clients for any outstanding payments. They are best placed to threaten these clients with cancelled policies if they don’t pay up within the 28 days allowed; or rather less than that in respect of certain classes of business and/or markets.
We provide all the right reports, MI and paperwork so you can do this on a weekly or a monthly basis.
You will also be rightfully responsible for all the proper accounting of your own business. The TEn Network does all the client and insurer reconciliation in our dedicated Accounts Department. However, the AR runs their own business.
As a member of TEn, you will use Acturis.
With all Appointed Representatives using Acturis it allows us to fulfil our FCA mandated role of oversight and, on a practical level, it is absolutely essential for your day-to-day operation as an AR and collaboration with TEn.
When you are set up on Acturis, you are able to see ONLY your own data, whereas TEn staff have an overview of and access to all branches.
You can connect to the Cloud based system using a simple broadband connection. An ADSL line of reasonable speed should suffice, although a fibre connection, such as BT Infinity, is preferable if locally available.
The capacity/speed of a connection will vary depending upon the number of people it is intended to serve, but, in any event, we are talking about a monthly line cost of between £20 and £50, possibly including VAT.
A start-up broker can, like many new brokers did in the 1970s, quite literally establish their businesses from a back-bedroom. In which case, most pre-installed home broadband connection should work Ok. Alas, not all of them do!
Business broadband connections are more reliable and less contended than are Home ones, reflecting the higher prices charged; but, theoretically, just about anything should do.
In terms of hardware, in most cases, servers are not required and any decent business/home PCs (or laptop) of less than a couple of years old will do very nicely.
Printers and scanners can be a little bit trickier to get right. Laser printers are definitely preferable to inkjet and scanners MUST be capable of converting a multi-page document into one single PDF.
Some multi-function machines are pretty much idea, although a FAX element to the multi-functionality is generally unnecessary these days.
As a start-up insurance broker, you’ll know better than most what insurances you will need to have in place. Clearly, we are also well positioned to obtain the quotes and to place the covers that you need.
You should also be prepared to take out an adequate Cyber Policy for your own protection and financial viability, in the event of somebody doing something bad to you.
TEn has a tailored Cyber policy for its Appointed Representatives for as little as £10.00 per month, from a trusted insurance partner. It need only be a very limited form of cover, because the larger financial risks are covered by TEN’s own policy.
Once you have a trading and/or a company name you may want to register a URL and to start thinking about creating a logo and a website.
Contact a local designer to get a logo created for your business, however, we do have tried and tested designers we can introduce you to as well.
You could also engage a local web designer - usually a brother-in-law - although we do offer a marketing support service. For as little as £600 (including VAT), we can do this for you using a pre-configured template, which is optimised for Google. This is competitively priced, even compared to a brother-in-law.
Since 2017, we have promoted our ARs business on the wider web to any prospective clients wanting to find an independent insurance broker in their area, using our own Find Broker website.
If you want help setting up or exploring how to promote your business through social media then we can help you there too.
Apart from some initial systems costs, marketing & stationery and CPD costs, the start-up costs for an AR are fairly minimal.
However, we will be happy to talk you through any more details and costs which you might incur in an initial meeting with you. Talk to us today!
To register your company, see the Companies House definitive checklist for setting up a company.
Do not expect to set-up as a sole trader! An Llp, Ltd or a Plc, are the only trading entities that we can consider, except in the short-term, as a very brief interim arrangement. We have to be able to ‘credit watch’ our ARs constantly.
By the time you get to this stage you will have already met and signed with TEn and we will certainly be able to help guide you with everything you need to do.
Please use the links below for further reading and, if you have any questions about starting your insurance broker business and becoming an AR, then make an enquiry today. One of our Directors or Regional BDMs will be in touch.
Site map coming fairly soon...
...by mid-November probably.
The site map will be an aid to navigation around our various websites. Of course, these sites have just undergone a major structural update and things are still changing.
So, it’s a bit like when a supermarket periodically shifts things around, either, just for the hell of it, or, because they have decided to squeeze in a click & collect point, where the bread used to be.
As stuff relocates, consequently, leaving the signs above the ends of the aisles as they were before, could become confusing.
Our current situation here is very similar.
Mind you, whether before or after the reorganisation, you can never find the Tahini paste. You always have to ask.