Gauntlet Group’s Appointed Representative network has been offering contracts to insurance professionals wishing to become an appointed representative for the past 15 years (since 2009).  But what is an insurance appointed representative?

An insurance-sector appointed representative (AR) can be either an individual  – typically an insurance account executive – or a firm, which carries on a regulated activity/activities, under the responsibility of an Financial Services Authority authorised financial services firm.

Within the Gauntlet Group AR Network, our appointed representatives operate under the authority of Gauntlet Risk Management Ltd, which is authorised and regulated by the Financial Conduct Authority (FCA), under firm reference number 308081.  As such, we are the principal for the appointed representatives who become ARs within our network.

What is an AR principal?

An AR principal, or appointed representative principal, is the authorised financial services firm that assumes responsibility for the regulated activities carried on by its appointed representatives (ARs).  It appoints ARs and offers them a written contract, having determined that they are fit and proper individuals.  The principal should also ensure that the AR is able to deliver the same level of protection to clients, as would be the case if those clients were dealing with the principal directly.  The principal must also assure itself that any appointed representative is solvent and is not so closely linked to the principal as to make proper regulation problematic.

How does an insurance appointed representative work with the principal?

In some financial sectors, an appointed representative is a true ‘agent’ of a principal, passing business to them. In the Gauntlet Group AR Network, however, our appointed representatives are not agents, but partners.  They operate their own insurance brokerages, as independent brokers, often at the heart of their local communities, and are self-employed businesses.  However, they work in partnership with Gauntlet Group, which provides a full suite of support services, which help their business establish itself, grow and prosper.

The most obvious service provided is that of FCA compliance, which is our (the principal’s) responsibility, as the FCA-regulated party.  We carry out all checks on our appointed representatives and ensure they work compliantly, treating all customers fairly, in line with FCA principles and codes of conduct.  As a principal, we require access to the appointed representative’s records, systems, premises and staff (if any are employed), so as to carry out full audits and checks and assure ourselves that due diligence is being shown, to ensure fair outcomes for customers during the insurance advice and sales process.

Beyond the vast amount of regulatory work we handle as the principal for our ARs, we also provide cutting-edge Acturis IT systems, full marketing support, comprehensive accounting and money-handling support, Professional Indemnity insurance and a wide range of back office and administrative services.  We have a team of AR brokers, who can handle placement for an AR, if they do not wish to broke their own risks, and we have an in-house direct sales team, which provides sales support, inspiration and leads.  The latter is a true differentiator for Gauntlet’s AR network and a considerable benefit for our ARs.

What are the benefits of being an appointed representative?

Most people want to become an insurance broker because the part of the job they love involves working with clients and covering their risks for them.  They do not start their own brokerage because they want to be an expert in compliance, having to deal with that on a daily basis.  By working as an appointed representative, they do not have to.  They can focus on sales and leave all of the compliance – and administration – to Gauntlet Group, as their appointed representative principal.

This frees them up to focus on their business plan and giving clients best advice and support.

Beyond this, most start-up brokers want to get up and running quickly within their new business. If they try to become directly authorised with the FCA, this could take six to 12 months.

There is also a big cost advantage to becoming an appointed representative.  The contractual agreement is typically one that involves a commission split with the AR principal.  (If it does not, the AR should question where the principal is creaming off their ‘cut’).  By operating in this way, the appointed representative is saved the cost of becoming directly authorised and meeting the FCA’s capital requirement.  This could be anything from around £7000 to over 10 times as much; a huge sum for a start-up business to have in place, just to start trading.  By becoming an AR, there are no financial barriers to prevent immediate trading.

How long does it take to become an appointed representative?

Gauntlet Group seeks to process all appointed representative applications as swiftly as possible.  This will involve an assessment of the applicant’s credentials and an honest appraisal of their business plan.  If we believe the individual or firm applying to become a Gauntlet Group appointed representative has the right abilities, skills and ethics, we would make an offer.  If accepted, we would then draw up a contract and then submit the application to the FCA.  Our end of the process could take just a few weeks but the FCA will typically require 30 days to register an applicant, or up to 90 days, if the AR needs approval as an ‘approved person’.

Can an appointed representative agreement be terminated by a principal?

Should Gauntlet Group, as an appointed representative principal, feel an AR is not meeting our standards, or performing their regulatory obligations correctly, we will organise an orderly winding-down of the AR agreement.  We will work with the FCA to see the termination of the AR agreement through.  This is only right, from the point of view of ensuring the customer is treated fairly but also because we, as the AR principal, have to indemnify any liabilities arising from business conducted by our appointed representatives.

What does an appointed representative do?

With Gauntlet Group AR Network, an appointed representative starts to build their new broking business from day one.  They find clients, assess their insurance needs and suggest the most suitable insurance products for them.  They then match the client with the right insurer, having had access to over 200 options available through Gauntlet Group. If they do not wish to find the right insurer themselves, they can call on the services of our AR broking team, who will do that on their behalf.  In this way, an appointed representative can just be the ‘people person’, finding clients, handling their needs and building a relationship with them, so as to seek to retain their business in the longer term.

How much business can an appointed representative place?

Gauntlet Group places no limits on its appointed representatives and allows them to place risks of any size.  Other networks will not allow ARs to place sizeable risks.

Can an appointed representative deal directly with insurers?

If you are an AR of Gauntlet, you have full access to insurers.  This is not the case with other AR networks.

Why are appointed representatives good for the insurance customer?

The Government itself has recognised that appointed representatives (ARs) are able to provide consumers with more choice and added value.[1]  If they work with Gauntlet Group, this comes from having access to a wide distribution network and insurance market.  Customers do not have to accept just one product, because that is all that the directly authorised broker can offer.

Market access for directly authorised brokers has become problematic at the smaller end of the broking market, because insurers demand a lot of business in exchange for giving a broker an agency.  If the broker cannot provide that level of business, the options they can offer to clients are very limited.  This is not the case with a Gauntlet Group appointed representative, who benefits from our extensive access to market, long-established insurer relationships and extensive group buying power.  These benefits can all be passed on to an AR’s clients.

For this reason, Gauntlet Group pioneered a means through which struggling, directly authorised brokers could de-authorise and become appointed representatives of Gauntlet Group instead.  Gauntlet De-authorisation Fast-track has proved a huge success and has already transformed the fortunes of various formerly directly authorised brokers, who are now financially better off as appointed representatives.

How much financial risk is there in becoming a self-employed AR?

There is a risk involved in any self-employed business that you are starting from scratch.  You do need to have strong sales and people skills and the ability to bring business in.  It’s hard work but can be very rewarding, if you stick at it.

However, we recognise that not everyone has the financial buffer, or family support, that can allow them to leap straight from employment into life as a start-up AR.  For this reason, we created our Gauntlet Brokerage Builderprogramme, which allows account executives to join us, as Broking Partner Designates, and build a future AR broking business whilst employed for around 22 months (or less, if they truly fly).  The programme steers them through the entire process required, if you wish to create an AR brokerage that should succeed.  It de-risks the move into life as an appointed representative, as a true ‘try before you fly’ route into self-employment as an insurance broker.

How do I become an AR in insurance?

Have a good read of, or listen to, all of our appointed representative resources. If it sounds right for you, contact NigelLaw@GauntletGroup.com in the first instance, or call Nigel on 07774 690436.  Nigel will talk things through with you and assess what the next steps should be. All conversations are strictly confidential, so take the opportunity to find out more.  You’ve nothing to lose and potentially a new career move, as an appointed representative, to gain.

[1] https://assets.publishing.service.gov.uk/media/61a792748fa8f50380e903ab/CfE_on_Appointed_Reps_Regime.pdf