Required start up cost for a car insurance company?

[lily price]

Looking for some information on starting a car insurance company,
I've been looking online but no where states if there is a required start up costs for a car insurance company? I'm looking to just start the company from my home office to keep fixed costs low, but wondering if there is a regulation that i would need to have a certain amount of money in the bank?

Also I know someone in the company must have some sort of qualifications, what qualification would i need to acquire in order to start this enterprise? or would it be possible to higher a contractor who has these qualifications so write up the policy's etc?

 

[OldWelshGuy]

Are you seriously saying you want to start up a company that actually underwrites car insurance? Or are you saying you want to set up a company that sells other companies insurance?

if it is the former then you need millions in the bank, and being blunt, if you don't know what you need, you don't have a chance of doing it.

 

[lily price]

How would I go about selling other companies car insurance?

 

[OldWelshGuy]

you can do so as an affiliate, or you could look to become a broker/introducer.

I have to ask, if you know nothing about this industry why do you want to go in to it?

 

[Scalloway]

Contact the insurance companies. For example Allianz.

https://www.allianzebroker.co.uk/broker-support/account-management/agency.html

 

[lily price]

if i sold other peoples insurance could I purchase it cheaper from them and sell it at my own price?

 

[Scalloway]

As I understand it you sell the insurance at the price quoted by the insurance company and retain a percentage as your fee. More information here.

http://www.out-law.com/page-8927

 

[Alan]

Not a good time to start as an insurance broker - existing brokers are fighting to create USPs against the larger online comparison sites.

This article predicts 1 in 4 brokers will be gone by 2018 - http://www.ibamag.com/news/marine/one-in-four-insurance-agents-will-be-gone-by-2018-17943.aspx

Given the investment to comply with strict regulations to become a broker, its not an easy or cheap start up.

Becoming an actual insurance company is an order of magnitude more complex and you would have to build a team of people with actuarial skills, risk management skills, fund management skills and IT skills at least, with a big pot of money to manage against risk.

 

[lily price]

Its not that i want to be a broker, I want to sell my own product but would it be possible to do that through an insurance company? For example present my business plan and to go through them? and if i was to start an insurance business from scratch is the money necessary by law?

 

[Alan]

I don't know exactly what money is required by law, but the regulators would need to be satisfied that you have a big enough fund and well enough managed, this would include suitably qualified people in your organisation.

If you want to 'self insure' (not sell a product but lets say you have a fleet of cars in your company) then the minimum bond is £500,000. So I'd take that as a starting point.

If you don't have the financial resources to
1. employ suitable qualified staff
2. have a fund 'at risk'
3. go through a regulatory approval process
(and I'm guessing here but I don't think seed capital of less than £15million is enough)
then presenting your business plan to an existing business sounds like a good option.
Make sure you get them to sign NDA's or they will just take your ideas though.

 

[lily price]

So if I turned to a larger company and said I need a company behind me for 'risk' funds to support my product, presented them with a business plan, How would this work? Would they own a share of my company or take a percentage of the sales made? Or is it likely they wouldn't bother with something like this?

 

[billmccallum1957]

So if I turned to a larger company and said I need a company behind me for 'risk' funds to support my product, presented them with a business plan, How would this work? Would they own a share of my company or take a percentage of the sales made? Or is it likely they wouldn't bother with something like this?

Chances are you wouldn't get through the door. A total lack of understanding would be the first reason to ignore you.

 

[Ian J]

So if I turned to a larger company and said I need a company behind me for 'risk' funds to support my product, presented them with a business plan, How would this work?

It wouldn't work at all. Insurance companies either sell directly to the customer or through authorised agents.

Are you aware that a single motor insurance policy could put the insurers at risk for many millions of pounds if the worst were to happen

 

[The Byre]

This is a classic case of the Dunning-Kruger effect!

i.e. not knowing enough to even realise that you do not know enough!

Insurance is a 100% knowledge based industry. Without that knowledge, you cannot even begin to think about working in it, let alone start an insurance company!

The idea that somebody who is uncertain about the difference between an agent, an underwriter, a broker and an introducer and has to ask if there are any regulations involved, is really quite funny!

Hey! Go for it! And keep us posted on developments!

I for one will follow your progress with great interest!

 

[Mark T Jones]

So, in a nutshell

Starting a car insurer will cost a fortune (millions) in research, legal fees, bonding and, of course, marketing

Getting an insurer to take your product on board - unlikely, as they have invested millions in developing their own product - what is your unique proposition that would sell yours? That said, I have one acquaintance who has achieved this, albeit with a unique equipment warranty not a vanilla product like car insurance. He is finally seeing financial reward after 7 years hard work and losses

Broker, covered above you either need to get yourself qualified, accredited and familiar with the market, or link to someone who is prepared to train you

 

[Opinion87]

Some of the advice people seek on here does make me laff.

 

[john1989]

Wind up surely?

 

[Mark T Jones]

Perhaps the right answer was £10.50?

 

[The Byre]

Perhaps the right answer was £10.50?

How many more times do I have to tell people - the answer to any unanswered question is 42.

 

[john1989]

How many more times do I have to tell people - the answer to any unanswered question is 42.

You forgot to deduct the stupidity factor. The answer is actually 37.

 

[The Byre]

Doh!