How to become an Insurance Broker
- Price: £5.99
- Published: January 2016
- Type: Business Opportunity Profile
- Format: PDF
- What qualifications and skills are required?
- What are the key market issues and trends?
- What are the main trading issues?
- Further information
Insurance brokers act as independent professional intermediaries between their clients and insurance providers. They provide advice about specific insurance policies, including those that business and other organisations are required to have by law and those considered appropriate to protect individuals, householders and business owners against foreseeable risks. They carry out the administrative work to create an insurance contract in return for commission paid by the insurance provider.
Insurance brokers operating in the UK must be authorised by the Financial Conduct Authority (FCA) as required by the Financial Services and Markets Act 2000 (as amended by the Financial Services Act 2012). For the purposes of authorisation, the FCA regards self-employed insurance brokers trading alone and partnerships of more than one broker as 'firms'.
Insurance brokers providing policies that offer clients 'pure protection' (insurance cover only rather than any kind of investment element) are allowed by the FCA to receive commission from insurers. Brokers selling insurance products that are associated with investment advice are subject to new rules that came into force on 1 January 2013 under the Retail Distribution Review (RDR). This means they cannot accept commission for investment advice but must charge the client for this element directly and explain clearly how both sets of fees are calculated.
This profile provides information about starting up in business as an insurance broker dealing in general domestic insurance (such as car, life, household and travel insurance) and commercial business policies. It describes the skills required, the training available, the current market trends and some of the key trading issues. It also explains the legislation that must be complied with and provides sources of further information and support.