How to start your own insurance company in the UK

Insurance is an exciting industry that’s full of fresh opportunities for entrepreneurs.   

However, it’s also one of the most heavily regulated industries in the UK. Before you can open an insurance company and start trading, you’ll have to jump through some significant regulatory hoops. 

This isn’t a quick process, but don’t worry, we’re here to walk you through it — so you can start an insurance company with confidence. 

In this article:

• What types of insurance companies are there?
• What business licence do I need to start an insurance company?
• How to start an insurance company
• How much money do I need to start an insurance business?
• How competitive is the insurance industry?
• Is starting an insurance company right for me?

Before you can open an insurance company in the UK, you first need to decide what kind of insurance company you want to become. The insurance world is wide-ranging and knowing your options can help you decide which path is best for you. 

Your decision will determine the level of regulation you face, the amount of capital you need to get started, and the complexity of the set-up process — so you want to get it right. Let’s start by looking at the three main types of insurance companies in the UK:

1. Insurance broker (intermediary)

This is the fastest and least expensive way to start an insurance company in the UK. As a broker, your job isn’t to underwrite* risk, but to act as the intermediary between customers and insurance providers. Basically, you help customers find the best deals and earn commission on the policies you sell.

• Pros: Lower startup costs and less regulatory paperwork (although you will be regulated by the FCA). It’s a great way to test your business idea before making a bigger commitment
• Cons: Your income depends on commission or fees, and you have to rely on the policies provided by the main insurers

*Underwriter is the technical name for a person (or institution) that evaluates and assumes another party’s risk in mortgages, insurance, loans, or investments.

2. Direct insurance provider (underwriter)

This is your full-fat insurance company option, with extra cream. 

Insurance providers are the companies that create and sell insurance policies, for example, Aviva or Direct Line. This means that when someone buys a policy from you, the risk is held on your company’s balance sheet.

• Pros: You have full control over your products and pricing, and you can build a strong brand identity. You have total control over the customer experience
• Cons: This is a heavily regulated (by both the FCA and PRA) and capital-intensive route, with the longest application process. You’ll need significant funds and a strong risk management system. But if you want to start a car insurance company, for example, then this route is for you

3. Managing general agent (MGA)

An MGA is a specialist insurance agent or underwriting agency that acts on behalf of an insurer. 

They might handle specific products, underwriting, policy administration, and even claims — essentially, they do a lot of what an insurer does but without taking on the risk themselves. 

• Pros: Faster to get started than a direct insurance provider, and you have more control over the product than a broker. Plus, you don’t need to hold the massive capital reserves of a direct insurer
• Cons: You’re still operating under an insurer’s licence, meaning you have less ultimate control than direct providers. You’re also relying on a relationship with a licensed insurance provider, which can be hard to secure

That’s a lot of food for thought. But hopefully it shines a light on what kind of insurance company you’d like to set up. 

You’ll also need to consider what specific areas of insurance you want to focus on. 

Here are some common insurance areas:

• Accident and sickness: Personal accidents, income protection, and critical illness
• Contents insurance: Protecting people’s belongings in their homes or businesses
• Life and annuity: Life insurance pays out a lump sum upon death, while annuities provide a regular income in retirement
• Motor insurance: Car, motorbike, and other vehicle insurance
• Pet insurance: Covering vet fees and other costs associated with owning a pet
• Travel insurance: Protection for holidays and trips, covering medical emergencies, cancellations, and lost luggage
• Commercial insurance: This is a broad category covering various risks for businesses, like public liability, professional indemnity, and property insurance

To start an insurance company in the UK, you generally need to get authorisation from one or both of the UK’s two main insurance regulatory bodies:

1. Financial Conduct Authority (FCA)
2. Prudential Regulation Authority (PRA)

The FCA looks after consumer protection, market integrity, and conduct, while the PRA is part of the Bank of England. It oversees the financial stability of firms like insurers.

• If you want to be an insurance provider (an underwriter), you’ll need authorisation from both the FCA and the PRA
• If you’re setting up a brokerage or an MGA, you’ll primarily be regulated by the FCA

Achieving authorisation is a thorough process, which both the FCA and PRA take very seriously. They want to make sure you’re fit to operate an insurance business, have enough capital, and can protect your customers. 

From their perspective, they want to keep the financial system — and its service providers — stable and trustworthy. 

Starting an insurance company involves several key stages — some of which are quite lengthy and a little complex, but we’re going to break them down into simple steps. 

We’ve already mentioned the three main types of insurance company models in the UK, direct providers, broker and MGAs, and the different business areas you could explore. Now it’s time to think about which model and areas best suit your vision, experience, resources, and appetite for risk. 

To help, you could start by answering these questions:

• Do you have a substantial amount of capital, and do you want full control over the insurance products you’ll be selling? 

If so, being an insurance provider might be for you

• Are you more interested in sales and customer relationships?

If so, a brokerage could be a great fit

• Do you want more control over the products you’ll be selling, but don’t want the full regulatory burden of an insurer? 

If so, setting up an MGA could be the path for you

Thinking carefully about the type of insurance company you want to start early on could save you a lot of time and effort down the line.

When choosing your insurance company name, you could start by brainstorming words related to your area or specialisms. It’s a good idea to make sure your name is memorable, easy to pronounce, doesn’t limit you in any way (for example, if it’s very product-specific, it might make future diversification tricky), and, most importantly, is available to use. 

You can check if your chosen company name is available to register on Companies House by using our company name availability checker tool. 

Once you know if your preferred company name is available, you could also check if it’s available as a web domain and on social media. This will help you build a consistent brand identity. 

The next big step is to officially register your business. Many insurance company founders choose to register as a limited company, which comes with limited liability and can simplify the process of meeting the strict reporting and governance standards required by the PRA and the FCA.

The company registration process involves preparing and sending a company formation application to Companies House. You can do this yourself, or with a company formation provider like Countingup. Our company registration service is quick and easy and we handle the Companies House application for you. However, once you’re successfully registered, you can’t start trading right away. 

You must get full regulatory approval from the FCA or PRA (or both) first — more on that in a bit. 

This is probably the most important document you will produce. For new insurance businesses, there are specific things your business plan needs to contain. For instance, you have to tell regulators how you intend to fund your business. 

Both the PRA and FCA need to see a full, credible business plan that shows you’re serious, well-organised and capable of running a compliant and sustainable insurance business. 

The PRA and FCA will look at this document very closely to understand your vision and how you plan to achieve it — so make sure you spend a good amount of time on the details. 

Here’s what your business plan should include:

• Executive summary: Write an overview of your entire plan — it’s a snapshot of what’s to come
• Company description: Here, you’ll say what type of insurance company you are, your mission, and your values
• Market analysis: Detail who your target customers are and your competitors. Give some insights on the current state of the insurance market, and where you fit in
• Products and services: List the specific insurance products you’ll offer, including details on how they’ll be priced
• Marketing and sales strategy: Give as much detail as possible about how you plan to reach your customers and sell your products
• Management team: Introduce the key people who own and who will be running the business, and what experience they bring. This could just be you, but the regulators will pay close attention to all team members, including any company directors
• Operations plan: Describe how you intend to run your business day-to-day, including details about IT systems, customer service, and claims handling
• Financial projections: You’ll need detailed forecasts for your income, expenditure, cash flow, and balance sheet for at least the next three to five years. This will show your financial potential and ability to meet regulatory requirements
• Sources of funding: Regulators will want to know how you intend to fund your business and whether you have any investors involved 
• Risk management framework: This is really important in the insurance industry — make sure you say how you’ll identify, assess, monitor, and mitigate the risks your business may face 
• Compliance and governance: Give as much detail as possible about how you’ll ensure you meet all regulatory requirements. This includes details on your internal controls and reporting structures

You can find out more details about what to include in your business plan by visiting the Bank of England’s new insurers’ guide. 

The PRA and FCA strongly recommend you complete a thorough pre-application phase with the Bank of England’s New Insurer Start-up Unit (NISU) before you formally submit your application. The process is designed to be phased and collaborative:

1. Initial contact: You start by sending your business plan and supporting documents to the NISU team. Currently, you do this by emailing the NISU team at NewInsurerStartupUnit@bankofengland.co.uk (or call 020 3461 8100 if you need more info first)
2. Structured feedback: The NISU team then reviews your proposal and holds a series of structured meetings to provide formal, written feedback, including an initial meeting, a feedback meeting (after a more detailed plan), and potentially a final challenge session

The primary goal of this phase is to stress-test your proposal, identify any major concerns early, and make sure your application is fully compliant before you file. 

While this can take up to eight weeks, addressing issues at the pre-application phase helps to prevent major delays and increases your chances of authorisation later.

Once you’ve addressed any issues and actions identified in the pre-application phase, you can complete your formal new insurer application forms on the Bank of England’s website. Once complete, you’ll need to send an email with an electronic copy of your application to the PRA: NewFirmAuthorisation@bankofengland.co.uk 

There is an application fee for a new insurer authorisation, which is paid to both the PRA and FCA. You can check the full list of new insurer application fees on the Bank of England’s website, but just an FYI, it can reach up to £25,000. 

When received, the PRA will send a copy of your application to the FCA, and both regulators will assess your firm independently. 

You’ll be assigned case officers from the PRA and FCA. They will usually be the same people who guided you through the pre-application stage. This should hopefully be quite helpful, as they’ll already be familiar with your vision for your business. 

So, how long should the authorisation process take? For a complete, high-quality application, you could expect to hear a decision within six months. If your application is incomplete or needs further work, it could take up to a year.

Congratulations! You’re a fully authorised insurance company, and you’re ready to go. After authorisation, you’ll receive the following documents from the PRA:

• Authorisation letter
• Scope of Permission Notice – this sets out the date from which you can trade, what regulated activities you have permission to carry on, and any requirements or limitations
• Welcome pack

And to make things extra real, you’ll also be able to see your new insurance business listed on the official financial services register. But seriously, getting authorised is an incredible achievement — well done. 

This is the million-pound question (literally)!

The amount of money you need to start an insurance business varies hugely depending on the type of insurance company you want to set up. Let’s look at how it differs between the three big insurance business models:

• Insurance provider (underwriter): 

This is by far the most capital-intensive route. Regulators require insurers to hold significant amounts of capital so they can pay out all manner of claims. We’re talking millions of pounds here, sometimes tens or even hundreds of millions, depending on the scale and type of insurance you’re offering. Your capital needs to cover solvency requirements (Solvency II in the UK), operational costs, and contingency funds.

• Insurance broker: 

Setting up a brokerage is considerably less expensive. You’ll still have to factor in startup costs for things like:

• FCA authorisation fees
• Professional indemnity insurance (which is mandatory for brokers)
• Office space (if you’re not working remotely)
• IT systems and software
• Marketing and website development
• Salaries for staff

You might be looking at tens of thousands to a few hundred thousand pounds to get a solid brokerage off the ground, rather than millions.

• Managing general agent (MGA): 

MGAs sit somewhere in the middle between underwriters and brokers. While you don’t need the same level of capital as a full insurer, you’ll still have costs for IT systems, regulatory compliance, professional indemnity insurance, and the staff needed to underwrite and manage policies on behalf of an insurer. Expect costs potentially in the hundreds of thousands of pounds.

It’s really important to have a very clear financial plan, so you can accurately assess your capital needs and show the regulators that you’re well-funded for the future.

The UK insurance industry is the largest insurance market in Europe, with total premiums amounting to £348 billion. That’s quite a breathtaking amount of money. 

It’s a big pond with some very big fish, making it a highly competitive market. You’ve got long-established giants, challenger brands, and a constant stream of new entrants.

However, competitive doesn’t mean impossible. There are always opportunities for new players, particularly if you can identify underserved niches or bring a genuinely innovative approach to your area through new technology and new ideas. Here are a few areas where there’s particular growth or demand right now:

• Insurtech and AI: There’s massive growth potential in using technology to improve processes, improve pricing, and enhance the customer experience — something legacy insurance companies may struggle with
• Cyber insurance: As AI continues to evolve, the market for cyber insurance remains relatively underinsured. It could be a good area to specialise in if you’re interested in this area 
• Niche markets: Rather than taking on the big players, you could focus on a very specific, underserved niche (e.g. insuring small tech start-ups, specific classic cars, or unusual property risks)
• Sustainable and ethical insurance: With a growing focus on environmental, social, and governance (ESG) factors, there’s demand for insurers who demonstrate strong ethical practices and offer products that support sustainable living

To succeed in the insurance industry, you need a clear differentiator — so consider what makes you stand out. It could be your customer service, your innovative technology, your unique product, or your deep understanding of a specific niche.

Starting any business is a huge undertaking, but an insurance company comes with its own unique set of challenges and rewards. 

Let’s weigh up the pros and cons:

Pros	Cons
High-earning potential Whether through underwriting profits or commission, you can achieve high returns	Massive capital barrier High initial startup costs, and for full insurers, you need to meet strict Solvency II capital reserves
Clear market need Insurance is legally required or deeply desired by consumers and businesses, providing a long-term, essential business model	Heavy and unavoidable regulation The PRA and FCA authorisation process is long, expensive, and absolutely mandatory. Compliance can create significant overheads
Specialised expertise By specialising in a product or niche, you create a highly valuable asset and own the customer relationship	Slow time-to-market The application and regulatory approval process often takes 6 to 12 months or significantly longer before you can trade

If the idea of intense regulation and a huge amount of startup capital is overwhelming, remember that starting as an insurance broker is a fantastic way to dip your toe into the industry. You can learn the market and build your brand without the immense financial risk of becoming a full insurer.

And there you have it. We hope you now feel confident about starting your own insurance company. 

In the meantime, if you’re looking for more new business support, head over to our resources hub where you can find our latest guides, tips and advice. From the company formation process to help with your tax deadlines, we’re here to help your insurance company start, run and grow. 

Best of luck. You’ve got this!

In theory, yes, but in practice, no. While there are no specific legal qualifications required to be an insurance company founder, anyone who holds a senior management position within the firm will need to be approved by the FCA/PRA under the Senior Managers and Certification Regime (SM&CR).

No, you can’t start an insurance company with no money. You must pay the application and authorisation fee to the PRA and FCA, and, more importantly, you must demonstrate you have substantial capital reserves to meet the regulatory minimum requirement before you are allowed to trade.

Yes, it is one of the hardest types of businesses to start due to the sheer volume of capital required and the intense regulatory scrutiny from both the FCA and the PRA. The application process is lengthy, rigorous, and demands a high level of detail in your business planning and governance structure.