Specialist insurance start up questions.

[Herper]

Hello everyone. New member here with a few questions.

As a result of some serious upheaval in specialist exotic animal insurance, myself and a few friends and contacts in the industry have been floating the idea of starting our own insurance company that provides insurance for keepers by keepers.
We know the industry we are part of and we know the risks associated with our animals and any public interaction/escapes.

We would be looking to provide public liability insurance that covers any legal fees/damages/injury/death as a result of escapes/injuries/accidents.
While we understand the risks associated with our animals none of us have worked in insurance before so I'm doing the research groundwork here.

So here are some questions I would appreciate answers/guidance on. Even if you don't have answers just a nudge in the direction to look is appreciated.

1. We would be looking to provide a minimum coverage of between £1M and £5m.
Are there any limitations/restrictions/requirements when dealing with such amounts?

2. As a financial product I assume that some employees would require accreditation/certification/licenses.
Can anyone tell me what those would be and where to look for starting the process of earning them?

3. None of us have worked in this sector before. Some of us have started and own/run our own businesses and so are familiar with things such as registering with companies house and the difference between LLC, sole trader and the like.
How would one go about starting and registering a company such as this?

4. We have no intention of providing any product other than our specialist exotics product though this may change in future depending on circumstances.
Would we be able to pool our assets and act as our own underwriter or do we need to seek out a third party to do this?

5. We envision this as a high risk high reward type of venture. With our understanding of the industry and customer base we feel confident our start up would be successful although if unlucky a claim by a client can run into the high millions.
When speaking to the banks about loans and applying for grants can anyone recommend any ways to advertise those pros/cons without spooking them?

That's about it for now. If anyone wants further clarification then please by all means ask and I will answer to the best of my ability however privacy is paramount and especially so in this case as the business involves animals in both private and educational/conservation facilities and some people can be..."passionate" about that subject.

 

[Mark T Jones]

Creating your own insurance carries high risk and will almost certainly require you to bond a significant sum.

It might be an idea to work with an existing insurer in the sector to create a hybrid or white label product.

A broker is a far more straight forward route

 

[DEBS Ltd]

Hello everyone. New member here with a few questions.

As a result of some serious upheaval in specialist exotic animal insurance, myself and a few friends and contacts in the industry have been floating the idea of starting our own insurance company that provides insurance for keepers by keepers.
We know the industry we are part of and we know the risks associated with our animals and any public interaction/escapes.

We would be looking to provide public liability insurance that covers any legal fees/damages/injury/death as a result of escapes/injuries/accidents.
While we understand the risks associated with our animals none of us have worked in insurance before so I'm doing the research groundwork here.

So here are some questions I would appreciate answers/guidance on. Even if you don't have answers just a nudge in the direction to look is appreciated.

1. We would be looking to provide a minimum coverage of between £1M and £5m.
Are there any limitations/restrictions/requirements when dealing with such amounts?

2. As a financial product I assume that some employees would require accreditation/certification/licenses.
Can anyone tell me what those would be and where to look for starting the process of earning them?

3. None of us have worked in this sector before. Some of us have started and own/run our own businesses and so are familiar with things such as registering with companies house and the difference between LLC, sole trader and the like.
How would one go about starting and registering a company such as this?

4. We have no intention of providing any product other than our specialist exotics product though this may change in future depending on circumstances.
Would we be able to pool our assets and act as our own underwriter or do we need to seek out a third party to do this?

5. We envision this as a high risk high reward type of venture. With our understanding of the industry and customer base we feel confident our start up would be successful although if unlucky a claim by a client can run into the high millions.
When speaking to the banks about loans and applying for grants can anyone recommend any ways to advertise those pros/cons without spooking them?

That's about it for now. If anyone wants further clarification then please by all means ask and I will answer to the best of my ability however privacy is paramount and especially so in this case as the business involves animals in both private and educational/conservation facilities and some people can be..."passionate" about that subject.

I'm not going to go through all of these one by one as I don't think you have a hope of doing this without any experience in the sector.

Firstly the regulators would require you to have millions of pounds in reserves and capital to even entertain you. Even then there are so many other variables.

As already mentioned I'd look to do some specialist scheme through a broker. Again you'd find it extremely difficult to convince an insurer to take on a scheme like this by yourself without any experience.

 

[WaveJumper]

A good read here for you:

How to Start An Insurance Company

Follow our complete guide on how to start an insurance company and take the first step to success. Read the full guide for tips.

parkinsurance.co.uk

 

[Financial-Modeller]

@Mark T Jones has written exactly what I would have said.

Among others, this sentence suggests that the OP should not be providing insurance as an underwriter, seemingly having exactly the opposite view of insurance that an insurer has.

5. We envision this as a high risk high reward type of venture.

 

[Herper]

Creating your own insurance carries high risk and will almost certainly require you to bond a significant sum.

It might be an idea to work with an existing insurer in the sector to create a hybrid or white label product.

A broker is a far more straight forward route

We've tried. We're doing this because there are none left in the sector after this year.

I'm not going to go through all of these one by one as I don't think you have a hope of doing this without any experience in the sector.

Firstly the regulators would require you to have millions of pounds in reserves and capital to even entertain you. Even then there are so many other variables.

As already mentioned I'd look to do some specialist scheme through a broker. Again you'd find it extremely difficult to convince an insurer to take on a scheme like this by yourself without any experience.

Would it help to know that we would have a guaranteed pool of a few thousand customers who are legally obligated to be insured and that we would be the only practical company for the vast majority outside of established BIAZAA zoological facilities?

A good read here for you:

Excellent thank you.

@Mark T Jones has written exactly what I would have said.

Among others, this sentence suggests that the OP should not be providing insurance as an underwriter, seemingly having exactly the opposite view of insurance that an insurer has.

Oops, genuine typo there (I'd just come off a short staffed night shift and was exhausted). low risk high reward is what I meant.
Historically, I am not aware of any major claims made since the 60's when the legislation was enacted.
Some small ones here and there for scratches, minor bites and maybe a broken bone or so but nothing in the realms of fatal encounters and such.

 

[Frank the Insurance guy]

Have you looked at: https://www.bankofengland.co.uk/prudential-regulation/new-insurer-start-up-unit

We're doing this because there are none left in the sector after this year

That suggests that it is not viable/profitable - if it was, then there would still be some left.

Do you know why they have left the market?

I'd look to do some specialist scheme through a broker

@DEBS is spot on - best option is to partner with a specialist and work with them as an affiliate who introduces business or an Appointed Representative. This will remove the need for your own insurance company - they will deal with FCA registration, compliance, policy wording, claims etc etc.

As you have no experience, it will be virtually impossible to gain FCA authorisation - you need a "CF1" who is the person who is personally liable for the activities of the business, including all compliance etc etc. Without experience the FCA will not accept them as a "CF1".

One option is to find and employ an experienced and qualified professional that has already been a "CF1" authorised by the FCA - it should make the FCA authorisation easier. You can then benefit from their experience and contacts in making sure the business is fully compliant etc. However, the FCA registration process could easily take 6-12 months!

There are "captive" insurance facilities available - this is where you effectively "self-insure" by having your own policy, setting your premiums, and paying the claims. However you will still need FCA authorisation and the costs to administer the Captive Insurance Company will be £100K + minimum per year. You will also need a huge amount of assetts/reserves in place from day 1!

I suspect (sorry if I am wrong), that this is a business that is high volume and low premium. If so, that is always a stumbling block as the business needs to be a very light touch - usually means huge investment in tech.

Unfortunately, whichever option you chose there is going to be a need for huge up front costs.

Availability of loans will be based on your business plan, which for something like this would no doubt be seen as very high risk, and therefore not available unless you are going to put your own house on the line with a personal guarantee.

If the well established and professional firms out there are no longer providing this type of cover its because its not viable or profitable. This suggests its not viable to you either!

 

[siangana]

It might be an idea to work with an existing insurer in the sector to create a hybrid or white label product.

I really like this idea
hmm, should I think of doing it myself? ?

 

[Herper]

Have you looked at:
Thanks. I'll have a read through.

That suggests that it is not viable/profitable - if it was, then there would still be some left.

Do you know why they have left the market?

@DEBS is spot on - best option is to partner with a specialist and work with them as an affiliate who introduces business or an Appointed Representative. This will remove the need for your own insurance company - they will deal with FCA registration, compliance, policy wording, claims etc etc.

As you have no experience, it will be virtually impossible to gain FCA authorisation - you need a "CF1" who is the person who is personally liable for the activities of the business, including all compliance etc etc. Without experience the FCA will not accept them as a "CF1".

One option is to find and employ an experienced and qualified professional that has already been a "CF1" authorised by the FCA - it should make the FCA authorisation easier. You can then benefit from their experience and contacts in making sure the business is fully compliant etc. However, the FCA registration process could easily take 6-12 months!

There are "captive" insurance facilities available - this is where you effectively "self-insure" by having your own policy, setting your premiums, and paying the claims. However you will still need FCA authorisation and the costs to administer the Captive Insurance Company will be £100K + minimum per year. You will also need a huge amount of assetts/reserves in place from day 1!

I suspect (sorry if I am wrong), that this is a business that is high volume and low premium. If so, that is always a stumbling block as the business needs to be a very light touch - usually means huge investment in tech.

Unfortunately, whichever option you chose there is going to be a need for huge up front costs.

Availability of loans will be based on your business plan, which for something like this would no doubt be seen as very high risk, and therefore not available unless you are going to put your own house on the line with a personal guarantee.

If the well established and professional firms out there are no longer providing this type of cover its because its not viable or profitable. This suggests its not viable to you either!

This is good to know, thank you.

As for why they left the market.
No, there was no reason or warning but we heavily suspect political pressure played a significant part in it as that's where the evidence points.
There are constant attempts to harm the animal industry in all aspects and we're a tiny part of it that don't have the backing of multi billion pound established sectors.

Our sector is what's called DWA (Dangerous Wild Animals) and this includes private keepers of animals such as venomous snakes, crocodiles/alligators, servals, savannah cats, emus, caracals and other non-domesticates species. We need a license to keep these animals which is granted upon satisfactory inspection of the premises by a vet and obtaining public liability insurance.

From my understanding, both underwriters who provided insurance to the various companies that we bought it from pulled out at the same time with virtually no warning, leaving no-one in the UK with insurance and therefore in breach of license conditions.

If they don't want to provide the insurance we have no other option but to do what we're doing now, or have the law changed. We risk our lives everyday we interact with the animals we choose to keep. We wouldn't be doing this if it wasn't a dedicated lifelong passion that many of us have devoted our lives to.

 

[The Byre]

You are going to get zero joy out of the UK insurance industry, so I would talk to Circus Krone in Germany. If you need help, PM me and I can give you the numbers, etc. But there are German insurance companies that do provide cover for animals other than dogs, cats, horses and children.

 

[Herper]

You are going to get zero joy out of the UK insurance industry, so I would talk to Circus Krone in Germany. If you need help, PM me and I can give you the numbers, etc. But there are German insurance companies that do provide cover for animals other than dogs, cats, horses and children.

Thanks, I'll be in touch soon. I'm at work just now. I have suggested non uk insurance to others before but as it's public liability insurance we need and not vet coverage we've really struggled.

 

[The Byre]

Liability is (AFAIK) what they do.

 

[The Byre]

It's a lot easier than I thought - assuming that the keeper of the animals has suitable buildings for their charges.

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[DEBS Ltd]

It's not that hard to get the insurance.

As has been said by people in insurance get in touch with a broker to organise a scheme.

Not sure what the motive is here. If it's purely for cover reasons it should not be a problem.

If you want to make money out of this then you have an issue.

Regardless it's going to take around 3.7M euros just in reserves, to get set up. That's before technology, someone who actually knows what they're doing, regulatory costs etc.

It's honestly a non starter to form an insurance company unless you have ridiculously deep pockets or someone willing to bankroll the whole thing. Can't see a bank going for it.

 

[Herper]

It's a lot easier than I thought - assuming that the keeper of the animals has suitable buildings for their charges.

These are old and outdated I'm afraid.

Lycetts are focused mostly on businesses and not private keepers. Exotics direct no longer provide any coverage.

For private UK keepers there literally is no one left.

 

[fisicx]

Probably because it’s seen as high risk and insurers are risk averse.

 

[The Byre]

For private UK keepers there literally is no one left.

I know nothing about this market, but I have come across many keepers of strange animals over the years, ranging from lions and tigers, to a pack of wolves, all kinds of exotic birds and glass boxes full of reptiles. Most of the time, the animals were very inappropriately kept. Yes, they were kept in accordance with any and every law about safety, etc., but wolves need a few hundred acres to hunt in, kites need about the same.

I am sure you are not one of those that keep hawks tied to perches and pumas in small cages, but my straw poll of very limited experience and the wider experience of a veterinary acquaintance of mine tells me that private keepers of wild animals often just do not have the funds to maintain their hobby in a way that is not partially or sometimes very cruel. Because of the expense involved in doing things properly, I get the impression that many keepers of wild animals do so illegally.

Most keepers of anything other than the usual dogs and cats keep their animals very inappropriately and in conditions. For example, keeping herd animals like horses in solitary confinement and/or in tiny fields when they need to wander about over a large area. Wild horses roam across plains and do not live in stables. A horse needs to be with other horses and have access to at least ten acres of grassland and mixed woodland.

We have kites, owls and goshawks on our grounds. They live in the trees and I watch them hunting and they watch me, especially when I am mowing the fields and they are hoping to catch a few mice once the grass has been topped. I don't need to keep them in a small confined aviary when nature provides us with the greatest aviary imaginable!

I have only come across a handful of private keepers of wild hawks in the UK and of those four or five, the living conditions for the birds were simply appalling. They were all hooded and tied to perches and kept in abject filth. I am sure that the conditions were legally species-appropriate and would pass all the local H&S rules, etc., but that hardly excuses the dirt and the overwhelming smell I experienced in all cases. Reptiles and fishes seem to fare far better.

Yes, of course there are people who keep exotic animals in appropriate conditions, but they are TBH few are far between. Somebody once did a survey of the life expectancy of large exotic animals in Germany and they found that they lived longest in circuses and not so long in zoos and shortest when kept privately. (The welfare and safety rules for German circuses are extremely strict and every time a circus arrives in a town, the local veterinary officials have to inspect living conditions and training schedules.)

Keeping wild animals in what most zoologists would class as genuinely species-appropriate conditions is unbelievably expensive and most people can't even keep animals as simple to keep as horses in conditions a horse would choose. Most of all, you need lots of space for most animals and if they are tropical, it has to be a heated space.

So given all of the above and the fact that it is a tiny and very opaque market and one that at the moment does little for the good name of an insurance company, it is not difficult to see why the established insurers would not seek to burden themselves with customers they do not really want.

 

[Herper]

I know nothing about this market, but I have come across many keepers of strange animals over the years, ranging from lions and tigers, to a pack of wolves, all kinds of exotic birds and glass boxes full of reptiles. Most of the time, the animals were very inappropriately kept. Yes, they were kept in accordance with any and every law about safety, etc., but wolves need a few hundred acres to hunt in, kites need about the same.

I am sure you are not one of those that keep hawks tied to perches and pumas in small cages, but my straw poll of very limited experience and the wider experience of a veterinary acquaintance of mine tells me that private keepers of wild animals often just do not have the funds to maintain their hobby in a way that is not partially or sometimes very cruel. Because of the expense involved in doing things properly, I get the impression that many keepers of wild animals do so illegally.

Most keepers of anything other than the usual dogs and cats keep their animals very inappropriately and in conditions. For example, keeping herd animals like horses in solitary confinement and/or in tiny fields when they need to wander about over a large area. Wild horses roam across plains and do not live in stables. A horse needs to be with other horses and have access to at least ten acres of grassland and mixed woodland.

We have kites, owls and goshawks on our grounds. They live in the trees and I watch them hunting and they watch me, especially when I am mowing the fields and they are hoping to catch a few mice once the grass has been topped. I don't need to keep them in a small confined aviary when nature provides us with the greatest aviary imaginable!

I have only come across a handful of private keepers of wild hawks in the UK and of those four or five, the living conditions for the birds were simply appalling. They were all hooded and tied to perches and kept in abject filth. I am sure that the conditions were legally species-appropriate and would pass all the local H&S rules, etc., but that hardly excuses the dirt and the overwhelming smell I experienced in all cases. Reptiles and fishes seem to fare far better.

Yes, of course there are people who keep exotic animals in appropriate conditions, but they are TBH few are far between. Somebody once did a survey of the life expectancy of large exotic animals in Germany and they found that they lived longest in circuses and not so long in zoos and shortest when kept privately. (The welfare and safety rules for German circuses are extremely strict and every time a circus arrives in a town, the local veterinary officials have to inspect living conditions and training schedules.)

Keeping wild animals in what most zoologists would class as genuinely species-appropriate conditions is unbelievably expensive and most people can't even keep animals as simple to keep as horses in conditions a horse would choose. Most of all, you need lots of space for most animals and if they are tropical, it has to be a heated space.

So given all of the above and the fact that it is a tiny and very opaque market and one that at the moment does little for the good name of an insurance company, it is not difficult to see why the established insurers would not seek to burden themselves with customers they do not really want.

I've got 8 years as a zookeeper behind me and almost 2 decades of reptile care. I can't speak for private mammal keepers as I am not in that circle myself and only have a few friends with skunks, ferrets and the odd serval. Most of my life is reptiles so my contacts are in the venomous snake and crocodilians community.

Poor animal care is endemic across the entire private keeper world. You will always have poor keepers. In the UK with the DWA act however you are granted a license subject to regular inspections and approval of the environment you're housing the animal in by DEFRA, local councils and specialist vets.

This is the top of the game in animal care. There's no shoddy keeping in our world outside of illegal keepers and they don't have any bearing on what we're trying to do here.

We are almost certain that the underwriters pulling out was politically motivated, not financially as that's were all the evidence points.

To be frank, there hasn't been a major claim since the 60's and we've been irritated at the legal requirement for insurance for a long time because if we made a claim it would mean we were doing something in breach of our license conditions so we all know there would be no payout.

However, we need the insurance to comply with the law.

 

[The Byre]

I've got 8 years as a zookeeper behind me and almost 2 decades of reptile care.

A bit like cooking - a professionally trained person will nearly always do a better job!

I can't speak for private mammal keepers as I am not in that circle myself and only have a few friends with skunks, ferrets and the odd serval.

They're the easy ones! Keeping large mammals is really, really easy - but you need (a) lots of land and (b) lots of money! Fences that can keep lions in cost real money!

We have badgers - but they are wild and live 100m from our house.

Most of my life is reptiles so my contacts are in the venomous snake and crocodilians community.

My father kept alligators for a while but that went severely pear-shaped and he moved on to exotic frogs - they are much less dangerous than a fully grown alligator with an attitude problem! At the tender age of seven, I ended up as the official alligator feeder. The adults were easy (raw meat) but the little ones had to be force-fed with egg yoke and minced meat - I'm sure there must have been a better way!

Poor animal care is endemic across the entire private keeper world.

My father was testament to that when it came to alligators! He was OK on frogs but pants when it came to alligators! He did not want to get bitten for some reason!

However, we need the insurance to comply with the law.

There must be a way around this problem - how about forming a society that adheres to strict rules and each puts money in the pot to create your own insurance? Just a thought!

 

[Financial-Modeller]

Far from any sinister political motivation, if there have been no claims for 50 years, that explains insurers' withdrawal from the market. No claims means no claims history, with no way to price risks, and no way to justify premium - and underwriting profit.

But as an aside

I've got 8 years as a zookeeper behind me...

Can you approach the insurers who cover similar risks for the zoo?

 

[Herper]

Far from any sinister political motivation, if there have been no claims for 50 years, that explains insurers' withdrawal from the market. No claims means no claims history, with no way to price risks, and no way to justify premium - and underwriting profit.

But as an aside


Can you approach the insurers who cover similar risks for the zoo?

No major claims, not no claims at all.
Minor claims for things like scratches and small bites, none for things like traumatic amputation or envenomation.

Not really sure how profit is being underwritten when they're collecting premiums and not paying out though.

Zoos are covered under different legislation and serviced in a business to business capacity, they won't touch private keepers.

As for political motivation, I can't post a link here but if you search for "BMJ tighten up laws on dangerous snakes" you'll find a recommendation from the RSPCA and British Veterinary Zoological Society to tighten or ban the ownership of dwa animals after the covid 19 pandemic.

Both organisations have always been against private ownership and everyone's insurance was pulled when the lockdowns ended. There's no legal justification for a ban so this is effectively a ban by the backdoor.

 

[fisicx]

Both organisations have always been against private ownership...

...many others are also against ownership. And a lot aren't even that keen on zoos either.

I can't see any justification for anyone to own an alligator or any other dangerous animal (which includes many dogs).

 

[Herper]

A bit like cooking - a professionally trained person will nearly always do a better job!

They're the easy ones! Keeping large mammals is really, really easy - but you need (a) lots of land and (b) lots of money! Fences that can keep lions in cost real money!

We have badgers - but they are wild and live 100m from our house.

My father kept alligators for a while but that went severely pear-shaped and he moved on to exotic frogs - they are much less dangerous than a fully grown alligator with an attitude problem! At the tender age of seven, I ended up as the official alligator feeder. The adults were easy (raw meat) but the little ones had to be force-fed with egg yoke and minced meat - I'm sure there must have been a better way!

My father was testament to that when it came to alligators! He was OK on frogs but pants when it came to alligators! He did not want to get bitten for some reason!

There must be a way around this problem - how about forming a society that adheres to strict rules and each puts money in the pot to create your own insurance? Just a thought!

I'm not aware of any private keepers of big cats in the UK besides that illegal keeper who got caught recently.

As for your dad, understandable, no one wants to get bitten by alligators, that hurts, a lot. I'd not recommend keeping an animal that can ruin your day unless you're prepared for and accept that scenario. I've lost friends to this hobby before, thankfully not in the UK but overseas where stuff is less strict but yeah.

We'll start a credit union, non-profit outfit, a mutual aid fund or pretty much anything that let's us keep going but the law, as written is explicit about public liability insurance. If we can't get or provide that, we're out of luck.

I'm also about to start the process of petitioning for an amendment to the act to state that private keepers accept all legal costs as a result of any incident with their animal.

Our animals, our responsibility.

 

[Herper]

...many others are also against ownership. And a lot aren't even that keen on zoos either.

I can't see any justification for anyone to own an alligator or any other dangerous animal (which includes many dogs).

Life's full of things people don't like or understand.

 

[DEBS Ltd]

LRMS seem to do this. I found a link to them just from a Google search. Won't let me post it.

If you want to discuss this with me in a professional capacity drop me a message with contact details.

 

[Herper]

LRMS seem to do this. I found a link to them just from a Google search. Won't let me post it.

If you want to discuss this with me in a professional capacity drop me a message with contact details.

That would be great.
I'll drop you a message.