For a lot of people starting out in the insurance industry, the end goal is to start your own insurance brokerage. To do this, you will probably want to have a client base and gain some knowledge and experience in this industry first. But from a regulatory perspective, there are 3 basic steps:
Step 1) Get a Level 3 (Management) License
Every brokerage needs a nominee or “designated representative” to supervise all of the brokers. The supervising broker needs to hold a Level 3 license in each province the brokerage is licensed in.
To get your Level 3 license, you need to pass all of the exams required to earn your Level 1, 2, and then 3 license in your province. In Alberta, this means passing the AIC Level 1, 2 & 3 exams. For Ontario, that’s the RIBO 1, 2 (Technical) & 3 (Management) exams. In BC and other Canadian provinces, that’s all 4 CAIB exams. After passing these exams, some provinces will require some additional courses specifically for supervising brokers.
As an alternative, you can also hire a Level 3 licensee on contract to sit as your supervising broker.
Step 2) Get an Insurer Contract
To start an insurance brokerage in Canada, you need to find at least 1 domestic insurance company that is willing to give you an “authority to represent” (ATR). This contract allows you to represent that insurance company and sell their insurance products. After all, how are you going to start a brokerage and have nothing to sell?
To earn a contract from an insurance company, you will need to present your business plan and make a case for why they should work with you. Do you have access to a market they want to be in? Do you have some special channels? How is working with you going to be worthwhile for the insurer? They will want to also know about the background of your team and ask for some minimum premium commitments in the first 12-18 months.
Unfortunately, Managing General Agents (MGA) contracts don’t count towards this regulatory requirement.
Step 3) File the Paperwork to Start an Insurance Brokerage
After you have all of this in place, you just need to go through the formality of filing the registration paperwork with each province you want to operate in. For more help with that, review our Regulatory Repository. This helpful database contains up to date information for what’s required in each province to register and stay compliant. The regulatory repository is a great tool for any current or prospective brokerage owner.
These 3 steps outline in general terms what’s needed to start an insurance brokerage here in Canada. But make sure you review the variations each provincial regulator imposes using the Regulatory Repository. If you still have any questions, most provincial regulators are happy to help. Just send them an email or give them a call.