You’ve decided to start up your own insurance broking business and are now considering which AR model suits you best. Allow us to give you a short overview of both models you are likely to come across whilst doing your research online.

The options, in the main, are as follows:

The traditional model

Since 2005, the AR models have been hitting the market. These models allow insurance brokers to deal with clients, collate risk information but in the main, do not allow brokers to deal with underwriters directly. Placement is controlled centrally, and commission is split on a pre-agreed percentage amount.

The Movo model

There is no stipulation by the FCA that requires AR’s not to have direct access to insurers. In fact, this is an anomaly in the UK commercial marketplace. In other classes of business, and other territories, the AR model, as it is run by Movo, is the norm.

The Movo model aims to give our brokers all the benefits of being directly authorised, but with less administrative burden.

Benefits of the traditional model

• Suited to the casual broker or brokers who lack the time or resources to manage the full broking cycle.
• Gains a larger team for support regardless of income generated.
• A well-resourced central broking team can be an asset.

The disadvantages of the traditional model

• Not broking for a long period can reduce market knowledge.
• A poorly resourced (or inexperienced) central broking team can create operational issues which are outside the broker’s control.
• A fixed commission sharing model isn’t always the best or fairest method to distribute income.

Benefits of the Movo model

• Direct access to insurers means you can build a trading relationship with insurers.
• We have a fixed fee* which means you can budget for your network costs.
• Our brokers control the placement of their own risks and generally are fully in charge of their brokerages.

The disadvantages of the Movo model

• Brokers will have a higher workload as they have no central broking team, in return for lower costs.
• Brokers will need to be skilled in broking to insurers, if they do not have these skills, they may be unable to obtain competitive terms.

Industry averages indicate that, on average, profitability for brokers ranges between 19%-23%. Picking an arbitrary split in commission will likely lead to some issues down the line for one or both parties.

Movo also operates a commission split but this is fixed by an amount rather than percentages. This is why we call it a ‘Fee’. The Movo Partnership proposition aim is to be the most cost-effective way to run a brokerage available, and to encourage new start-ups to replace the brokerages being lost to M&A activity.

Please feel free to contact us for a confidential discussion.