Besides being a highly regulated industry there are many large companies that offer insurance cover, both short term and long term. It would be advisable to get some experience in the industry before you consider starting on your own.
What is a broker?
A broker is an independent agent, who represents the buyer, rather than the insurance company.
Once you have some experience in the industry this is a good way to start your own business in the form of a “brokerage”.
What is a financial planner?
Companies such as Sanlam and other large insurance companies offer industry-recognised qualification and training to become a Registered Financial Planner. Unisa offers an online training course for the short term insurance industry too.
Short term insurance is heavily regulated in South Africa. To learn more about it and what is required to comply you would have to access the Short-Term Insurance Act (Act 53 of 1998 as amended)
The Insurance Sector Education & Training Authority (INSETA) offers a learnership programme where you gain hand-on experience or attend one of the training courses. Unisa offers an online training course for the short term insurance industry too.
Starting a Brokerage
A broker is an independent agent, who represents the buyer, rather than the insurance company, and tries to find the buyer the best policy by comparison shopping.
After gaining some experience in the industry this is a way to start your own business in the form of a brokerage which you could develop into a specialist broker who focuses on the short-term insurance industry.
Those who wish to focus on the long term insurance industry where life, retirement annuities and disability insurance are sold; you would need to train as a Financial Advisor.
This is an excellent way to build your own business with little capital expenditure.
It is a very responsible career choice as you have to justify the trust that entire families place in you: to invest their hard-earned money in the correct financial vehicles.
What is credit insurance?
Credit insurance covers debt under certain circumstances. These include goods that you buy accidentally get lost, stolen or damaged or if someone dies, becomes disabled or is retrenched.
Apply for a license from the FSB
The first thing you need to do is to apply for a license through the Financial Services Board. This kind of insurance usually covers the outstanding debt owed by you to the company that provides the credit, and will be paid directly to the credit provider.
The Financial Advisory and Intermediary Services Act No.37 of 2002 (FAIS Act) requires any person or company that provides financial services to register as a Financial Services Provider and obtain a license through the Financial Services Board (FSB).
Understand how to evaluate risk
Before you start this type of business, you should be trained in evaluating risks and determining rates and coverage pertaining to the short-term insurance industry.
Can another branch of an insurance brokerage open in another city using the same Financial Service Providers (FSP) licence?
In terms of the Financial Advisors and Intermediary Services (FAIS) Act, all South African financial service advisors are required by law to obtain a license to practice from the Financial Services Board (FSB).
Contact the FSB for permission
To confirm if the license you hold will allow you to open a branch in another city, contact the FSB with the business name and the FSP licence number. It will then be able to determine if you must apply for a new license.
Due to regulations, it is not able to provide this information without a licence number. It also requires more details in order to confirm banking and accountancy regulations.
By law, a short term insurance broker requires a license issued by the Financial Services Board (FSB) as a provider, or as a representative of a provider, to operate a brokerage.
The FSB regulates the insurance industry, intermediaries, retirement funds, friendly societies, unit trust schemes, management companies, and financial markets.
The FSB ensures that these FSPs have sufficient knowledge and are “fit-and-proper” to dispense advice.
For more information: www.fsb.co.za