This is a guide on how to start an insurance company in South Africa.
An insurance business can be very profitable but it is a very complicated business to setup. Insurance is an essential part of our lives; we insure all the things that are of value to us
We are going to look into some of the steps that you should follow if you want to be an insurance agency or broker. Being an insurance underwriter can be very expensive and will cost millions of Rands.
What is an independent insurance agency?
An independent insurance agency sells insurances provided by several different insurance companies. An independent agent makes money from commissions and is not considered as an employee of a company.
Your brokerage firm will have to hire its own agents and employees, like any other full on company. This is mainly the difference between an agent that works for a brokerage firm and setting up a brokerage firm. The employed agent mostly earns on commissions and doesn’t have to worry about accounting/ hr and other departments of the business. The main advantage of a brokerage firm is that you can hire a lot of agents under you and pay them on commission basis.
This is the main reason why a brokerage firm is so attractive, you don’t have to physically go to convince clients to sign up, you can hire people to do that and pay them on a commission. I was once employed in an insurance brokerage firm as an agent, it’s a lot of work to convince clients to use your services.
Here is what you need to do to build your insurance business in South Africa.
1. Get experience
You can survive with starting some businesses without experience but this is not one of them. You have to have work experience in order to be able to start this business. You need to work as a broker for at least one year before deciding that you want to start an insurance company.
The good part is that finding a job as a broker is not that difficult, since most jobs are commission based. It will be very difficult for you to get a license to operate as an insurance agency if you don’t have experience.
2. Get licensed
You need to apply for the license through the Financial services board (FSB). 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.
Every long-term or short-term insurer must pay a levy to the FSB. The amount of the levy is determined from time to time and is published in Government Gazette in terms of section 15A of the Financial Services Board Act.
3. Get an office
Some insurance underwriters will not want to work with you unless you have an office. Having an office will also earn you trust from your clients. The office doesn’t have to be anything big or fancy.
4. Management system
You need a management system to efficiently track all your clients, tracking the effective date, the renewal date. Excel just won’t cut it, you have to get a management software, this software is not really expensive and will help out a lot.
5. Website
You have to make a website for credibility, it will also make it easier for people to find out all the necessary information about your products and get quotes by filling in a form. You can get a website for only R1 200 from Promta Web Services.
6. Marketing
You will need to spend a lot of money on marketing. You will spend money on things like business cards, flyers and digital ads. Some insurance companies prefer to cold call clients. You will spend some money buying an email list or contact list. The best way to go about marketing an insurance company is by using digital ads.
7. Phone service
A lot of your time will be spent on the phone talking with leads and your clients. It’s important to get a very good phone service.
Conclusion
This was a guide on how to start an insurance company in South Africa. Do you have thoughts or questions? Comment below.
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Donald
10 Dec 2021This is quite informative. Thank you.
If you have over 5 years sales experience do you think it will still be difficult to get the license?
Ayanda
5 Jan 2022Hi I would like to start an insurance company where by clients would be investing money then I give out what they will need when the time is due e.g they get a cow , groceries etc
Polite
7 Apr 2022Hi Ayanda,
I am also busy with a plan of starting something like that if you wish for us to partner up and share ideas and execute our plan please contact me, I will drop my email adress here. politelindi21@gmail.com
Innocent
21 Feb 2022Hi I would like start an insurance company that basically insures, new development houses. my plan is to partner with a property development company. I’m struggling to figure out how to go about it?
Thabang Motleleng
16 Mar 2022How much experience must I have before I could get a license from FSB, I have more than 5 years working as an agent
Tshepo molokomme
1 Apr 2022what a brilliant idea