So, you have decided you are going to be the master of your own destiny and are going to start your own insurance brokerage.

What is the right way to structure your business?

1. Limited company v’s sole trader – One of the first decisions you will have to make is whether you are going to trade as a limited company or as yourself. Of the 52 brokers who are currently members, the vast majority have incorporated. Having a limited company means you are restricting your possible losses, with the reverse being possible when trading as a sole trader.

2. Shareholders – It is often the case that businesses find a variety of shareholders. Although you may feel that you do not want to dilute your shareholding, consider what they may bring to the table. It might be business contacts, investment or even being your major customers.

3. Trading from office or home – In the early days, our experience teaches us that its best to keep costs low. Often office shares work well in the early days.

4. Bookkeeping and accountancy – Often this is left until the end of the first-year trading with some considerable difficulties. At Movo we provide a supported package for startups that includes bookkeeping and accountancy. But if you do not join us or opt against this, consider opening your own company via Companies House and make sure you retain all your codes as you will need this.

These are just some of the considerations of how to structure your startup insurance brokerage.

Why not talk to the Movo Partnership about your current circumstances, we’d be happy to help you come to a decision on how best to move forward. We also have a variety of support packages to help you get started should you decide to work with us.

All conversations are always kept confidential.

 

Professional Indemnity Insurance (PII) has benefited from soft market conditions for as long as many of us can remember. However, for a variety of reasons the last two years has seen a withdrawal of capacity, which is making even the simplest renewal process a significant challenge.

The recent dramatic change in the PII market for brokers

Every broker wants strong relationships with their partner insurers and when you are starting out it’s tempting to open as many agencies as possible. This may help short term, but in the longer term could result in insurers citing ‘lack of support’ and closing the agency down. It’s better to take your time and form long-lasting partnerships.

Although the number of insurers underwriting insurance broker PII policies was relatively small, it was always a competitive market. In the main, it provided enough alternatives to ensure that reasonable coverage and premiums were achieved. For the reasons stated above, the market had shown signs of constricting in early 2020 and the arrival of the Covid-19 pandemic shortly after caused this to exacerbate even further.

Fear around increased broker claims resulting from the pandemic appear to have forced any wavering insurers out of the market, with significant departures seen in the last few months, For those left writing PII for insurance brokers, many have closed their doors to new business completely. When dealing with renewal cases, they are asking probing questions around business continuity plans in respect of Covid-19. Dependent upon the responses, insurers may look to apply a full or partial Covid-19 exclusion. These exclusions vary and some are particularly wide so it is vital to understand the potential impact on your business before renewing.

How can brokers move forward in 2021

Despite the harsh implications of the hardening PI market, you can help your business obtain adequate cover with this guidance:

• Communicate with your Pi specialist broker—Make sure you meet with your broker to discuss what level of cover and unique policy features your organisation needs. After all, your broker has the insurance expertise to provide you with the most cost-effective, high-quality cover solutions. Ensuring frequent communication with your broker will help you stay informed, supported and—most importantly—covered during these market conditions.
• Start the process early—In a hard market, you can’t wait until the last minute to secure quality cover. With this in mind, be sure to engage in your PI policy process as early as possible. Doing so will give you plenty of time to gather any documentation required. In addition, insurers will likely ask more questions than usual before finalising your policy—making it even more vital to get a head start on the process.
• Invest in risk management—Now more than ever, it’s vital to invest in robust risk management processes.
• Robust internal practices and standards to mitigate on-site risks – Movo pride themselves with helping start up brokers with the best systems and procedures in order to be efficient and constantly compliant.

Movo Professional Risks have negotiated an exclusive scheme for Movo members that is significantly more competitive than current open market premiums designed for new start-ups.

If you are concerned or have any questions regarding your professional indemnity cover now, or at renewal, please don’t hesitate to contact us to discuss the best options open to you.

 

So, the FCA has finally granted you permission to start trading but before you write your first case, you’ll be approaching an agency base. This will either be direct to insurers or via wholesalers.

Below are our 5 top tips on doing this best:

1. Keep your agency base small to start off with

Every broker wants strong relationships with their partner insurers and when you are starting out it’s tempting to open as many agencies as possible. This may help short term, but in the longer term could result in insurers citing ‘lack of support’ and closing the agency down. It’s better to take your time and form long-lasting partnerships.

2. Personal guarantees

You are likely to be asked to provide one for many of the main insurers. This unfortunately is standard and whilst you should be very cautious of giving personal guarantees, insurers have the legitimate right to protect their sums of money that are held under risk transfer.

3. Completing forms

It’s hard work, and it’s amazing that the industry does not have a standardised agency form yet, but this is the reality of applying for agencies. Make sure you clear plenty of time to complete this administrative task.

“At the Movo Partnership, we support new start up insurance brokerage with more than just a trading platform but also with good advice and lending support when needed”.

Lea Cheesbrough

4. Wholesalers’ v’s Direct Agencies

Obviously, no one wants to share their commission with another broker but often, in the early days, it pays to have a good relationship with a wholesale market that can give you some buying power.

4. TOBA audits

You should be carrying this out periodically but invariably this can take a back seat in a buy new brokerage. Make sure you try to fit this in as it’s a requirement.

There is no easy answer as to whether you should make the leap into the unknown and set out on your own.

Here are some considerations to take before you setup your own insurance brokerage:

 

1. Hard work

You may be the most talented broker in the UK but its going to take more than just talent to run a successful insurance brokerage. In the early days, experience will be replaced by determination and above all else, hard work. You need to give your business the best chance of being successful by making a personal commitment to put in the hours. Eventually, the workload will decrease but there is rarely any substitute in the early days for hard work.

 

2. Self-belief

Our experience is that most brokers have that moment where they question the very decision to venture out on their own. You should prepare yourself for this test of your own abilities and ensure you have the will to persist and make a success of your brokerage. It’s often one of the hardest decisions of your career, leaving a secure job and setting out on your own. However, it’s worth remembering that the rewards can be equally great. Once you set out on your own path, make sure you give it the best chance of being successful by developing an iron will to succeed.

 

3. Financial opportunity

Starting an insurance brokerage is hard but it’s even harder when you haven’t arranged your personal finances to withstand a period of reduced income.

Most brokers who join us have some unavoidable bills. We recommend you build up a minimum of 6 months buffer to ensure you have enough time to win some clients and for the period of collecting money and receiving your commission. It cannot be overstated how important arranging your personal finance is.

“At the Movo Partnership, we support new start up insurance brokerage with more than just a trading platform but also with good advice and lending support when needed”.

Lea Cheesbrough

 

4. Being a great broker

Ultimately, clients use brokers as they want expert advice when arranging their insurance programs. Unless you are a large new venture who is hiring a team, it is likely you will be relying on yourself to win and service clients. The key to being an owner/manager is that you must provide great service and be liked by your clients.

These are some of the considerations you should make when deciding whether to starting an insurance brokerage, there are many others too though, and at the Movo Partnership we will happily help you make the best decision for you and your future career.

We have many models available to suit different individuals and businesses, so please do get in touch for a confidential discussion.

Congratulations, your brokerage has been so successful that it can now start thinking of hiring an extra pair of hands to help your business expansion. 

Here are some useful tips on what to do next:

1. Hire a HR advisor
The UK operates a fairly liberal employment regulatory regime that is easy to navigate but everything is easier with experience. If you can afford it, consider hiring an external firm that will provide you with support in drafting up contracts and making sure you are doing the right things. The cost for this is likely to be around £200 a month but how good a deal you get will be dependant on your negotiation skills.

2. Online legal portal
In recent years, several legal portals have sprung up. These providers make it easy for you to create your own contracts and get some legal support as and when you need it. We recommend: https://www.laweasier.co.uk/.

3. Finding the right staff member
This is, without doubt, the most important part of hiring staff. Unfortunately, there is no secret we can share that will ensure you only hire the right candidate, this will come down to your interview technique and sometimes, just good fortune. It pays to ensure you have a rigid and well-researched interview process.

“At the Movo Partnership, we support new start up insurance brokerage with more than just a trading platform but also with good advice and lending support when needed”.

Lea Cheesbrough

4. Look for personal recommendations
It’s always best, when possible, to get a personal recommendation from someone you know and trust. Candidates can sometimes come across well in an interview but turn out not to be a good fit after they start. However, personal experience of having worked with someone will give you the real picture of that staff member’s quality.

5. Payroll
For those start-ups who are brave enough, you can manage this yourself via online accounting software packages like Quickbooks or Xero, alternatively, you can hire someone to help you.

By joining the Movo Partnership you will receive free HR support, legal and optional accountancy services.

Call us for a confidential discussion.

Nothing is more exciting (or Daunting) than venturing out on your own for the first time.

As a starting point for setting up your own insurance brokerage, we will assume you have a good knowledge of broking as the FCA will expect you to be able to carry out your duties competently. 

To help you in the process, here are 3 things to Consider When Starting an Insurance Brokerage

1. Financials
A detailed budget of how you are going to live in between the period of winning your first clients and managing your own household budget. This may seem obvious, but this is one of the most crucial elements that the FCA and/or your selected principal firm will look for. It’s hard enough running a business for the first time but the added pressures of not being able to make ‘Ends meet’ may be the difference between surviving and failing early on.

2. Familiarise yourself with the basics
Probably the most overlooked element of running a business is familiarising yourself with obligation like how company accounts work, when tax needs to be paid and which professional advisors you need. Plenty of research before you launch will mean you have a good knowledge base and are better able to deal with obligations as and when they come up.

3. Have a marketing plan
This can be as simple as picking five known clients to go and knock on their doors and ask for their business. After all, your brokerage wouldn’t be successful if it didn’t have any clients, so you really need to give some thought as to how you are going to get clients on board. The moment you sign your first client will be a major milestone in your business’s journey from ‘Plan to reality’.

 

Are you thinking about starting an insurance brokerage and are wondering what experience you need to have?

At Movo, we have helped dozens of start-ups so let us give you a brief summary of the Experience Needed to Start An Insurance Brokerage:

1. A great deal of experience
The FCA, and clients for that matter, will want to know that you have the required experience to manage their insurances. What is an appropriate amount of time is a subjective matter but in reality, a minimum of 5 years front-line broking experience is recommended. The FCA does not stipulate an actual time amount but rather that a person needs to be competent to carry out a particular function. Every persons story is different but in summary, the more experience, the better.

2. Qualifications
Although these are not mandatory, we do advise individuals to progress their professional qualifications. We particularly advise that the module M81 Insurance Broking Practice, part of the DIP CII qualification is undertaken. This is an excellent module that will summarise key requirements for running an insurance brokerage. This book is worth reading prior to setting out on your own journey.

3. The right attitude
There is no doubt that in the early years of your Insurance Brokerage’s start-up story, that you will have some challenges. It’s really important to set yourself up in the right mind frame and be determined to overcome the inevitable ‘Bumps in the road’

4. Cross class knowledge
Unless your business plan is set out to only sell a single product, it’s important to have cross-class experience as most clients will need a range of products which, without support, you may not be qualified to advise on.

At the Movo Partnership, we support new start-up insurance brokerages with more than just a trading platform but also with good advice and lending support when needed.

“At the Movo Partnership, we support new start up insurance brokerage with more than just a trading platform but also with good advice and lending support when needed”.

Lea Cheesbrough

If you are struggling to meet some of these basic requirements, why not create a plan to improve before launching your own venture? If you are confident you do meet these criteria then why not get in touch for support and help to start an insurance brokerage today.

After careful consideration, you have finally decided to bring your idea to life and launch your brand-new insurance brokerage but have you considered what is required of you as a company director?

Here is a summary of the 7 duties of a company director taken from Companies House.

1. Your company’s constitution
All limited companies will have Articles of Associations, chances are you have opted for the model one’s provided as standard, but you really should read this document and familiarise yourself with your company’s constitution.

2. Promoting the success of your company
This may seem like an obvious one but what is often overlooked by new Directors is that the limited company and the Director are two separate entities. You need to ensure you are giving your company the best chance of success and be acting in its best interests.

3. Independent judgment
Easy right? Making independent judgments can be more challenging when you are having to juggle various viewpoints. What you need to remember is that ultimately, the Directors are liable for their decision making and therefore you need to be satisfied that you are making your own decisions.

4. Exercise reasonable care, skill, and diligence
When making decisions, make sure you are acting reasonably within your skillset. There will be expectations of you to ensure you are acting within your various stakeholders’ interests and upholding their rights.

5. Conflicts of interest and personal benefits
The next 3 legal duties relate to managing conflicts of interest. These need to be managed and for you to be upfront with other stakeholders when these moments arrive.

“At the Movo Partnership, we support new start up insurance brokerage with more than just a trading platform but also with good advice and lending support when needed”.

Lea Cheesbrough

If you are thinking of setting out on your own, contact us for a confidential discussion. Please also view the guidance given to company directors from Companies House: https://www.gov.uk/guidance/being-a-company-director