Looking for an Insurance Expert - For a definitive answer

slapbang12

Hi,

I repair iphones and im looking to take the company to the next level. I am looking to offer customers the opportunity to "insure" their device against certain types of damage for a small monthly fee.

What I have been told is that I will have to be FSA registered if it falls under a "contract of insurance".

I am not looking to advertise it as insurance but more of a damage cover.

Would anyone either be able to answer my question or point me in the right direction of someone who can.

Many thanks

InsideInsurance

Read http://www.fsa.gov.uk/smallfirms/resources/factsheets/pdfs/factsheet10.pdf

You need to get proper legal advice to have any defence if it is decided that what you are offering is a regulated insurance product.

On the basis you are presumably going to be covering accidental damage and not just component failure based breakdown then it is likely that it would be deemed insurance and therefore require you to deal with regulation.

Depending on how serious you are and how big you think you will go there is always the possibility of doing a deal with an authorised firm and act as an appointed representative of them. There are some hurdles to jump through to get the AR status but massively lower than becoming fully authorised in your own right.

slapbang12

thankyou.

The reasearch ive done would suggest it could be massive. Offering the cover of on the screen, back, home button, ear piece or loud speaker.

It would be a mixture of both component failure and accidental damage - if someone drops the phone it may dislodge the loud speaker for instance but leave no evidence of accidental damage.

The difference with ourselves is the fact that we repair the damage in house - giving us huge advantage over competitors - average turnaround being around 72hrs from sending phone for repair to receiving fixed one back.

Ive looked at the FSA website and there seems to be so much red tape and obstacles to get through unfortuantely.

Whats the plan with an authorised firm - how would I be an apointed representative of an insurance firm? Simpler? do you know the criteria/costs involved?

Many thanks

InsideInsurance

Also see http://www.fsa.gov.uk/consumerinformation/firmnews/2011/sat_warranties.shtml who tried to argue they were warranties and not insurance but courts ruled against them

The direct costs are minimal....

As an AR effectively the authorised entity (Principle) accepts responsibility for your actions. So whilst the cost of getting an AR status may be very low the Principle may require you to put in place procedures and governance that do cost money to setup and/ or run - one random example could be that all call to and from customs may have to be recorded and stored off site for a minimum of 6 years or paying for an external compliance auditor to do annual checks etc etc

http://www.fsa.gov.uk/smallfirms/new_to_regulation/becoming_an_appointed_representative/index.shtml is the link about becoming an AR

Insurance is not an area of business to enter into lightly and without an expert in the field working with you then you are going to have a massive uphill struggle opening the necessary doors and convincing companies to spend time (and money) considering your proposition

dacouch

Currys manage to avoid being regulated by the FSA for their "Warranties" they describe them as Service Plans and use complicated off shore companies to avoid regulation and insurance premium tax

InsideInsurance

Do you happen to know if it's ever been tested in court re DSG? Just curious

dacouch

I think from memory they were taken to court and lost.

Here's some reading for you...

http://www.google.co.uk/#hl=en&sclient=psy-ab&q=currys+dsg+hmrc+court+cases&oq=currys+dsg+hmrc+court+cases&gs_l=hp.3...1405.11187.0.11348.32.29.3.0.0.4.1447.10734.2j3j6j6j4j4j0j2.27.0.les%3B..0.0...1c.1.avQf8qEDyX4&pbx=1&bav=on.2,or.r_gc.r_pw.r_qf.&fp=c0e2fbf5d593002b&biw=1366&bih=643

Basically they pay the money into a trust fund that they in effect administer. Their customers do not have access to the Ombudsman, are not protected by the FSCS, they pay / collect no IPT and their not regulated by the FSA so neither are their sales staff and no one checks their solvency.

You would think with the money they charge for their "warranties" they could afford to go down the proper root.

forgotmyname

The research you have done shows a massive market. But so are the scams.

Say someone drops their phone off a bridge and lands on someone's head and injures them. How deep are your pockets?

Just offer fixed price repairs. £200 to repair your phone with 12 month no quibble warranty.

rudekid48

Sounds to me like you might be coming at this from the wrong angle.

Why not approach some of the existing "gadeget" insurers and see if you can agree a deal with them - they create and market the 'insurance' product and you provide the repair service for the product?

That way, you can still get a commission for every policy sold and you avoid the need for costly and extremely time consuming regulation issues.

The providers will already be regulated and can bring the insurance expertise to the table for you.

Just a thought.....

slapbang12

thanks for your replies.

This is one angle I was thinking of aswel - approaching insurers and doing the repairs for them.

I was looking for a n angle away from being FSA registered and jumping through hoops etc etc - would I not have to be FSA registered this way or would this qualify me as an AP?

This could work - and could be a simpler way to get started I think!

So I wouldnt set the price or anything I would just do the repairs they send me and get paid for them? Just so Im clear