Appointed Representatives – The next big insurance distribution revolution


When I first began in this industry, everyone was independent. It was completely common to see small shop fronted insurance brokers selling simple personal lines products to their local community. How things have changed in the past 20 years!

So what has changed. In that time we have had the birth of a financial regulator, enormous amounts of cheap money to allow huge insurance broking consolidation on a scale no one would have ever have thought possible and a digital revolution changing the very way people interact with the insurance markets. In essence, everything has changed beyond recognition. Whether these changes have been good for the industry or the consumer is a matter for further debate.

So what next? Insurers still remain committed to grass roots level insurance broking. After all, this is where it started and despite some of the enormous deals that take place with the super brokers of our age, it still remains the most profitable sector due to low claims and low management costs.  It is this commitment that has allowed network groups such as Broker Network and Purple to flourish as it gives insurers access to this smaller but profitable low end of the market.

The real issue facing both new start up and existing directly authorised brokers is the issue of cost. Over the years, the costs for small businesses has spiraled. FCA Fees, Professional Indemnity Insurance, CASS fees, solvency margins. Not to mention the amount of time a broker would need to spend making sure that the compliance is correctly implemented. For a new business, the barrier to entry has never been so high with many struggling to bring in the money they need in the first year, let alone having the time to deal with the compliance required.

The solution, in my opinion, will be the Appointed Representative Insurance model. Similar to a network, these business will be able to get quick and effective access with many of the requirements either given or implemented on their behalf. An effective Principal will be able to duplicate the standard compliance processes over potentially hundreds of ARs, ensuring that compliance is not only effective but properly harmonised. The model will provide cost and time savings and is likely to be the preferred platform for new start up businesses.

I would not be surprised to see AR super groups in the not too distance future if not eventually dwarfing the consolidators in terms of numbers and become the standard normalisation of insurance distribution for the next generation.


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