Becoming An Insurance Broker: Your Guide To Success In Nz

To become an insurance broker in New Zealand, you must be listed as a Registered Financial Adviser (RFA) on the MBIE's Financial Service Providers Register (FSPR). You can apply as an individual FSP online through the Ministry of Business, Innovation and Employment (MBIE) website. There are no specific secondary education requirements to become an insurance broker, but qualifications in accounting, business studies, English, and maths to at least NCEA Level 2 are useful. Insurance brokers advise clients on insurance policies, sell insurance, and may work for financial institutions.

Register as a financial service provider

To become an insurance broker in New Zealand, you must register as a financial service provider (FSP) on the Financial Service Providers Register (FSPR). This applies to anyone providing broking services in New Zealand, although certain exemptions may apply for other types of financial advisers.

You can apply as an individual or an entity. The process is done online, and you will need to pay an application fee, an FMA levy, and a charge for a criminal history check (approximately $795 in total as of October 2018).

Before applying, you will need to make some key decisions and gather all the necessary information about yourself and your business. This includes confirming the financial services you will be providing, as once registered, you must keep this information up to date. Some services require licensing or certification from the Financial Markets Authority (FMA) or the Reserve Bank of New Zealand (RBNZ).

If you are applying as an individual, you will need to provide:

• Your full legal name and any other names you are known by or have been known by previously.
• Your date of birth and gender (this will not be publicly available).
• Previous FSP numbers (if applicable).
• Your residential address (this will not be publicly available).
• Your business address—the physical address from which you provide financial services.
• Any trading names you use.
• An address for communication, along with your business and personal email addresses (these will not be made public).

If you are applying as an entity, you will need to provide:

• The name of the FSP or the entity's registered name overseas.
• The country where it is incorporated.
• The incorporation or registration number.
• Any trading names used.
• The business address—the physical address from which financial services are provided.
• An address for communication, including an email address (this will not be made public).
• Details of directors and other personnel, including their full legal name, any other names they are known by or have been known by, their date of birth, gender, and residential address (this information will not be made public).

In addition, you will need to confirm the following for both individual and entity applications:

• The financial services you will be providing. Some services may require licensing by the relevant authority.
• Whether you will be providing financial services to retail or wholesale clients.
• Reporting entity status under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act).
• The month you will file your annual confirmation.
• A threshold declaration confirming that you expect to provide financial services to persons in New Zealand above the minimum annual business threshold: 10 New Zealand resident financial services clients and $10,000 of financial services transactions with New Zealand resident clients. In the first six months after registration, half of this threshold must be achieved.

Once you have provided all the necessary information, your registration will typically be confirmed within 2-5 working days.

Qualifications and training

To become an insurance broker in New Zealand, you must register as a financial service provider on the Financial Service Providers Register (FSPR). You can apply as an individual FSP online through the Ministry of Business, Innovation and Employment (MBIE) website. As of October 2018, the application fee, FMA levy, and criminal history check cost a total of $795.

There are currently no qualification requirements for insurance brokers in New Zealand. However, this may change with the impending introduction of the Financial Services Legislation Amendment Bill (FSLAB). The new legislation would introduce a minimum level 5 certificate qualification requirement for all advisers, as well as the completion of an insurance certificate strand.

Currently, insurance advisers are required to have a New Zealand Certificate in Financial Services (Level 5). Advisers can also obtain professional qualifications through the Australian and New Zealand Institute of Insurance and Finance (ANZIIF), which offers certificates and diplomas that focus on developing technical insurance skills.

While there are no specific secondary education requirements, accounting, business studies, English, and maths to at least NCEA Level 2 are useful.

Business structure

When setting up an insurance brokerage in New Zealand, there are three common business structures to choose from: sole trader, partnership, or limited liability. The business structure you choose will depend on your specific circumstances and business goals.

If you are starting the business on your own, a sole trader structure is likely the best option. As a sole trader, you will control, manage, and own the business, and be entitled to all profits. You can still hire employees as a sole trader. Most New Zealand businesses start as sole traders and then transition to a limited liability structure as the company expands.

If you are setting up the brokerage with another person, a partnership may be a good option. This structure can help spread the costs of business operations, and the partnership itself does not pay income tax. However, partnership structures are becoming less popular as company structures can offer better protection.

The most successful business structure in New Zealand is the limited liability company. This structure is a legal entity separate from its shareholders and owners, providing better protection. You might consider this structure once your brokerage is established and you want to expand and take advantage of the protections that limited liability offers.

Register for GST

• Register for goods and services tax (GST) if you’re earning more than $60,000 each year.
• You can apply for GST registration online through the New Zealand government website.
• You will need to provide information such as your business details, including your business name, address, and contact information, as well as financial details, such as your expected income and expenses.
• Once you have submitted your application, you will receive a GST registration number, which you must display on your invoices and other business documents.
• As a GST-registered business, you will be required to charge GST on the goods and services you provide and to remit the collected GST to the New Zealand Revenue Agency on a periodic basis, typically monthly, quarterly, or annually.
• You will also be able to claim input tax credits for the GST you pay on business purchases and expenses, which can help reduce your overall tax liability.

Join a broker group

Any experienced insurance broker in New Zealand will advise against operating without support. This is where broker cluster groups come in. Broker groups can help negotiate cover for clients, offer access to better policies on better terms, and provide access to overseas insurers. They are also essential to an insurance broker's education and training and will help you accumulate the required number of CPD points each year.

Insurance Advisernet

Insurance Advisernet is a growing network of independent brokers in New Zealand that offers a suite of products and services that allow your clients to benefit from collective strength in the general insurance marketplace. You can benefit from proven IT systems that reduce the time and cost burden of your non-income-producing activities, allowing you to focus more on clients and further develop your business.

Insurance Advisernet has its own preferential wordings with all the major insurers in New Zealand. It also has a state-of-the-art IT platform for your broking business, along with client-focused apps that keep it at the forefront of technology.

Benefits of Joining Insurance Advisernet

• The strength of the AUB Group, the largest equity-based risk management, advice, and solutions provider in Australasia.
• Exclusive arrangements providing access to products and services unavailable to individual brokers.
• Reduced operating and compliance costs for brokers.
• Increased income opportunities for brokers and confidence for clients.
• Knowledge sharing across the network, including regular training seminars.
• Professional Indemnity insurance cover for brokers.
• Peace of mind for clients – IANZ has a separate monitored and audited Trust Account for all premium payments.
• A dedicated online marketing centre that will provide you with resources and tools to help promote and grow your business further.

Frequently asked questions