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Becoming an online insurance broker?
I posted a tentative question the other day about starting a business as an online insurance broker, but got shot down in flames based on the fact I know little about the industry. Those who did so may well be right, but before I eliminate the idea completely, could someone please point out the inacurracies in the assumptions I have made about how it might work?
- Arrange a deal with a insurance carrier
- Create web site complete with online quote system
- Promote web site via PR and search engines (This is what I do for a living now)
- Sell policies – I take commission for sale and carrier takes on the policy
I imagine that this is either tremendously oversimplified, or completely wrong, so I’d be interested to hear where my ideas are flawed.
Feel free to be as harsh as you like if I sound a bit like a muppet. 
I am based in the UK. I’m just not totally sure about the correct terminology, ‘carrier’ for instance.
There is some discussion in the Insurance Trade press at the moment as to whether comparison websites should be regulated by the Financial Services Authority or not.
If you become an agent of an insurance carrier e.g. an agent of Fortis, then you will have to be regulated by the Financial Services Authority or become an appointed representative of a company that is regulated by the FSA – this is certain.
the question then becomes: If you are supplied access to insurance companies quotation systems and provide quotes based on information provided are you then a representative of the company, an agent of the company or something else?
I suggest you look at http://www.fsa.gov.uk/pages/Doing/Do/index.shtml which gives details as to whether you need to be authorised by the FSA for your business model and also suggest you contact the FSA and, if you can get any advice from them, they might advise you further.
I am not stopping you from becoming an ‘online insurance information provider’ but ‘broker’ implies advice (unless you say you are not and don’t give any – which is tricky), it is just that you have to be careful to ensure that you obey the current rules about insurance regulation.
To give an example, I was considering providing a service to help customers find local insurance brokers however that activity could be construed as assisting in the performance of an insurance contract – and thus require separate regulation.
As a (regulated) insurance broker myself, I and many like me would be annoyed if someone with no experience or knowledge of insurance is allowed to sell policies through the internet without having to obey what I am sure you have found out is a large body of rules via a loophole in the laws.
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