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What is an Appointed Representative (AR)?
In business we often fall into the trap of using technical jargon or a well placed acronym, not really considering that you may not have a clue what we’re talking about. This is particularly prevalent in insurance and whilst plain english is starting to creep into policy wordings and the like, we are still a long way from the average person being able to peer through the murk!
The term Appointed Representative is becoming increasingly common in the general insurance market and to understand why we perhaps need to take a look back to the FCA (Financial Conduct Authority, previously the Financial Services Association) beginning to regulate general insurance around the turn of the last century. Prior to this there was an established regime of voluntary regulation, however it was deemed insufficient and so we are now in a position where running an insurance company or brokerage comes with a mountain of regulation, which while well intentioned often misses the point.
One of the unintended consequences of this change was the demise of the local broker and an acceleration of the consolidation in the broking market that had begun some years before. The independently minded professional who wanted to run his or her own brokerage was dissuaded from doing so due to the scale of the task of dealing with the FCA. Those a little longer in the tooth decided it would be best to sell out to a larger organisation who had more resources to deal with the ever increasing burden of regulation.
The early 2000s saw a huge amount of consolidation within the industry and whilst this stalled for a while (due to the financial crash of 2007) it has certainly gained pace again in recent months with some of Yorkshire’s largest independent brokers being gobbled up by corporates.
So what is the independently minded insurance broker to do; if they want the freedom of running their own business, but don’t want to bear all of the burden of dealing with regulation? Not to mention having the ability to get the best deals for clients from increasingly large insurance companies?
The answer is to become an Appointed Representative or AR. This model has grown significantly in popularity in recent years and is in part responsible for delivering more choice and better service to local businesses.
Essentially this model allows an individual or small group to start their own business, whilst operating under the umbrella of a much larger organisation. The “Principal” broker is registered directly with the FCA and is responsible for the actions of its Appointed Representatives. This model also allows smaller brokers to have access to the buying power of a much larger organisation to enable them to secure the right deal for their clients, as well as access to a much wider team to assist with administration, claims, finance etc.
The benefit to local businesses is that they can have the benefits of dealing with a larger broker in terms of premiums, covers and so on, but with the real personal touch of dealing with someone who knows the business inside and out and can give the advice that is totally relevant to their business needs.
In addition the local broker is there on hand when something goes wrong and can help get claims dealt with effectively and efficiently avoiding the need for constantly chasing and the frustration of dealing with remote call centres.
So if you’re fed up of dealing with a large faceless broker, why not try an AR, there’s likely to be one in your area!