Starting your own car insurance company in the UK can be a daunting prospect but with the right guidance and determination it can be done. If you’re planning on setting up an insurance company, there are certain considerations to take into account that may make it more successful.
The most common way to start an insurance company is to become an authorised provider. This means that the business must hold a valid Financial Conduct Authority (FCA) license. Depending on the size and nature of the business, different regulations must be met, but the bottom line is that all companies selling insurance must get their FCA license and adhere to certain guidelines.
Having a comprehensive insurance product offering is important. Customers will be looking for a full product range, from comprehensive cover up to third party liability. Understanding the differences between these policies and what’s included within is key to helping customers choose the right product. Becoming a successful car insurance provider requires a deep understanding of the different policies and what they offer.
A big part of providing car insurance to customers is understanding the risks of motor owning, and mitigating them. From issues such as car theft and damage, to risks relating to income, road safety and breakdown assistance, starting an insurance company requires having an in depth understanding of what a policy should provide. It’s not just the headline aspects that should be included though; understanding the nuances of the policy and how added benefits can be tailored for the customer can really set your business apart.
Aside from the actual policies themselves, managing customer expectations is key. Insurers must be able to explain the difference between third party and comprehensive cover and why certain additional features are beneficial in certain cases. Additionally, it’s important to offer advice on the value and quality of the policy, rather than just the price. This can help customers feel they are getting a rounder picture of the policy, as well as give them a confidence in the provider.
Arguably the most important part of running an insurance company is complying with the relevant legislation. As previously discussed, this means having the relevant FCA license and maintaining it, but it also means being open and transparent with customers. This includes accurately reporting changes in policies, explaining the terms and conditions in detail, and handling complaints fairly and efficiently.
For companies looking to find the perfect car insurance policy for their customers, understanding the industry and the needs of customers is key. Offering the right product for their needs, combined with above-and-beyond customer service, is how successful insurers stand out from their rivals.
Your Customer Base
Developing a customer base is also essential. There is strong competition in the car insurance market, both between local and national insurers. As such, making sure customers know who you are and the services you provide can be a real challenge.
Marketing is key here, as is understanding the target audience. Market research can be incredibly valuable in discovering what car owners’ needs are and what they’re looking for in an insurance provider. This helps insurers understand their position in the market and develop their customer strategy.
From there, it’s about finding ways to communicate with customers and get them to pick you. This includes engaging through digital channels such as websites, search engines and social media, as well as using traditional methods such as print and radio. Having a finger on the pulse of popular trends and product development can also help get customers on board.
The actual purchase journey is also important. Customers must be aware of the product details, any extras that may be included and what the product offers. Generating customer loyalty is also a massive part of selling car insurance, and understanding customer needs is essential here.
Understand The Costs
It’s also important to understand the costs and liabilities of setting up and maintaining a car insurance company. Legal requirements, employee costs and creating product that’s fair for customers all come into consideration. As does customer service staff and customer service IT systems.
It’s also key to understand the customer acquisition costs and customer loyalty programmes that you offer. These can all make a difference to the success of the company and its ability to both retain and attract customers. Understanding the long term costs associated with running the company can also help when it comes to planning and budgeting.
Find The Right Partners
Having the right partners in place is important. This means having systems in place to handle customer relationships and queries, but also insurers and brokers. Understanding which insurers you can work with and the cost and terms of each policy is key. Additionally, understanding how brokers can help add another layer of business success to your company is essential.
Engaging with other insurers and brokers will also help increase your customer base and offer more choice to customers. Utilising insurers and brokers is not only effective in customer service but also frees up resources for other parts of the business.
Setting up an insurance company has a range of financial considerations, from start-up capital to investor capital. Depending on the size of the company, different sources of funding may be required. Having the right financial partners in place is essential for the success of the business, both to help secure the initial capital and to help with the long-term financial strategy.
Additionally, insurers should be aware of the cost of running their business and be able to plan accordingly. Also, understanding the return on their investment and insurers’ profit margins is key. Knowing these figures can help the company survive and thrive in a competitive marketplace.
Develop an Established Network
Finally, having a wide and established network is key. Not only is it helpful to have contacts in the industry, but being on good terms with different stakeholders, such as repair and breakdown companies, can help create and maintain relationships with customers. Additionally, attending events and seminars, such as those hosted by the ABI, can help get your brand out there and let customers know who you are.
For many businesses, setting up a car insurance company is a long, challenging process but with the right guidance and understanding, it can be done. Knowing the ins and outs of the industry, as well as understanding customer needs, is key to starting a successful insurance company. It also goes without saying, but having the right financial tools and industry partners in place is also essential.