Do you want to start your own brokerage? What about a franchise? Coversure's Nick Hollands explains what you have to do
Have you have reached a point in your broking career when you feel you can go no further as an employee? It may be time to start thinking about owning and managing your own business.
A franchise organisation can give you all the help and encouragement you need, but first you must pass a strict vetting procedure - and have around £30,000 to invest in the business.
At Coversure, for example, we look for individuals with at least three years' relevant experience, normally in general insurance broking.
First, we contact financial institutions and credit reference agencies, along with previous employers and our own industry contacts, to provide suitable references for the applicant.
Second, and perhaps most important, people will require access to funds that will enable them to become established without putting too much pressure on the business.
Our initial franchise fee is £7,500. And, taking into account other start-up costs it would be reasonable to assume that somewhere between £25,000 and £30,000 would be needed to get the business off the ground.
Once all this is agreed there are many benefits to a franchise agreement. For example, once a location has been agreed, Coversure will not open any further offices in that area for the term of the franchise, which is normally five years. The franchise holder can make use of an exclusive marketing arrangement for that area to attract customers.
We will also help the franchise holder to select and decorate the premises. As with any franchise, it is important that the decoration of each office follows a similar style and that external and internal signage are identical at each location.
Another benefit of a franchise is network access to the company's computer system, access to a wide range of general insurance products and a full back office system.
Each of the products available to our branches attracts a high rate of commission resulting in a high retention of sales earnings. To be precise, our franchise holders retain all of their earning, less 1.5%, which is deducted from turnover on a monthly basis.
One of the biggest problems brokers face when trying to set up their own businesses is getting agency agreements. When Coversure was established in 1986, we decided to offer insurers the opportunity to vet individual applicants, so they could decline applications.
However, most insurers will afford facilities to every Coversure office. Applications are made to a panel of insurers and Lloyd's underwriters, whose facilities give franchise holders access to virtually every general insurance market.
Training and compliance are vital issues for those looking to establish a new general insurance brokerage. For compliance, the terms of the General Insurance Standards Council (GISC) rulebook can be daunting for inexperienced individuals. But help and advice is available and is a benefit that you would not receive if you were a start-up on your own.
For training, Coversure offers access to online education in all areas of general insurance, once an individual training needs analysis has been completed. This is in addition to the comprehensive training programme offered to new franchise holders shortly before their office is opened.
While our franchise holders are masters of their own destiny we employ a very rigid method of operation. We ensure that branches are operated efficiently and honestly and are offering customers the best available advice and service. We are particularly scrupulous over credit control, to protect a fledgling business from the difficulties of securing payment from clients.
Our aim is to establish about 100 offices in the UK before offering our services internationally. We will be able to do this only if individual franchises are successful. This can be achieved only by profitable sales. All services we offer are designed to create as much free sales time as possible.
In short, Coversure offers all the services and support required for a newly-established broking business, or an existing business looking to re-launch. The cost of establishing the business is relatively low, profits can be high and the only other requirements are insurance experience, commitment and enthusiasm.