AR model is a ‘lifeline’ for broker startups – Toby MacLachlan

The appointed representative (AR) model can serve as a “lifeline” to startup brokers by lowering the barriers to market entry for new firms. 

That was according to Toby MacLachlan, managing director at Ignite, told Insurance Times that he considers the AR model to be “probably the best route for pretty much all startups” looking to break into insurance. 

The appointed representative (AR) model in the insurance sector allows new broker firms to operate under the license and oversight of an established firm, making it quicker and easier for firms to enter the market without the lengthy FCA authorisation process.

MacLachlan explained that the AR framework provides new brokers with a fast track to market, reducing the timeline for regulatory approval from the average 114 days to around 24 days. 

He added that the time saved on regulatory compliance for startups enables emerging firms to focus on market testing, product iteration and system optimisation. 

“In the life of a startup, four months is quite a long time,” MacLachlan said. 

He noted that every extra week waiting for authorisation is a potential risk to a startup’s limited funding and viability.

With initial budgets often stretched thin and investors keen on seeing progress, any delays can put startups at risk of exhausting their resources before they even reach the market.

For many, even a short setback can mean the difference between securing the next round of funding or running out of capital entirely. 

MacLachlan noted that the AR model can be an advantage here, allowing startup brokers to pursue operational goals without the financial strain of a prolonged wait.

According to MacLachlan, the AR model offers a faster path to market by streamlining the approval process and removing major hurdles, allowing startups to “get trading, get understanding markets,” and make crucial product adjustments on the way to a market-ready model.

The AR pathway, he said, also allows startups to “learn and adjust along the way” – a process crucial for fostering innovation and product development. 

“Pure speed is a part of innovation,” he added.

Collaboration

As more brokers adopt AR status, MacLachlan said he has noticed a growing trend of collaboration within the industry. 

Many established brokers are “excited” about mentoring newcomers and offering AR status, which promotes the sector’s ongoing evolution, he said. 

MacLachlan noted that “brokers love to help each other out,” creating a “virtuous cycle” wherein established firms are motivated to pay forward the support they once received.

He pointed to Ignite’s collaboration with a client as an example, highlighting the collaboration and innovation that AR status can enable. Together, the firms launched a self-service platform for non-standard products, such as motorhomes and caravans, with the aim of “making insurance more accessible for consumers”.

MacLachlan described this as “exactly the kind of innovation that AR status can bring to market.”

Resources and expertise

Insurance entrepreneurs can operate under an authorised entity as appointed representatives, ensuring regulatory compliance without full FCA authorisation.

This setup allows young firms to trade under an experienced partner’s wing, benefiting from regulatory oversight and industry connections. 

While full FCA authorisation typically spans four months, MacLachlan highlighted that AR status is achievable in under a month, giving companies an invaluable head start. 

MacLachlan described the AR route as “a way to ease the regulatory burden on young companies while still ensuring compliance and oversight,” calling it a practical middle ground for aspiring brokers.

Beyond regulatory expedience, appointed representatives can benefit from established partners’ resources and expertise, supporting their entry into a highly competitive market. 

By leveraging a parent company’s established regulatory status, new brokers can focus on refining and launching their products rather than on compliance costs. 

MacLachlan said: “It just takes the pressure off [and] allows [new brokers] to start trading almost as soon as [the firms] receive AR status.”