How insurance brokers get paid: the money, explained before you ask

Commission: the standard model

When a broker places your policy, the insurer typically pays the broker a commission — a percentage of the premium. It is not added on top of your bill as a separate line: it is part of the premium you are quoted. Commission rates vary by class of insurance and by insurer, and they compensate the broker for the work of advising, placing, servicing and supporting the policy through the year, including at claim time.

The model has an obvious tension worth naming honestly: commission is a percentage, so a bigger premium means a bigger commission. What keeps that tension in check is a mixture of regulation, competition and reputation — FCA rules require firms to manage conflicts of interest and act in customers’ best interests, clients can and do check the market, and a broker whose placements look expensive does not keep clients long. But the tension exists, and a broker who pretends otherwise is being less than straight with you.

Fees: the other model

Some broking work is charged as a fee instead of, or alongside, commission — commonly for larger or more complex risks, for work that does not result in a placement, or where client and broker simply prefer the transparency of an explicit price. The rule that matters to you is timing: any fee must be disclosed to you before you commit. A fee that first appears on an invoice after the event is a conversation you are entitled to object to.

“Independent” and “whole of market”: what the words actually claim

These phrases carry weight, so it is worth knowing what they do and do not mean. An independent broker is not tied to particular insurers — it chooses where to place your risk rather than feeding a fixed panel. Whole of market is a stronger claim: that the broker selects from a sufficiently broad analysis of the relevant market for your risk. Neither phrase means every insurer on earth was approached; both mean the broker’s recommendation should be driven by your interests rather than by an arrangement with an insurer. If a firm uses either phrase, it should be able to explain, for your risk, which markets it considered and why.

Two related things are worth asking about anywhere you go. Some brokers place business through schemes or facilities — arrangements with particular insurers that can bring genuine benefits (breadth of cover, price, service) but also concentrate placements; a good broker will tell you when a scheme is in play and why it wins on merit. And some firms receive additional remuneration beyond basic commission, such as profit-share arrangements. The clean question is simply: “What, in total, does your firm earn in connection with my policy?”

The questions worth asking any broker

None of these are rude; all of them are normal. How are you paid on my policy — commission, fee, or both? What is the amount or rate? Are you independent, and which markets did you approach for my risk? Is any of my insurance placed through a scheme or facility, and what did it win on? Do you receive any other income in connection with my account? A broker with nothing to hide answers quickly and specifically. Evasion is information.

Our basis, stated plainly

Apex Insurance Brokers is an independent commercial broker, authorised and regulated by the FCA (FRN 724952). We are normally paid by commission from the insurer, included in the premium you are quoted, and we disclose what we earn on your policy if you ask. Where we charge a fee for any work, it is disclosed and agreed with you before you commit — the same basis stated on our quote pages. If you want the numbers for your own policy, ask; you will get them.

Frequently asked questions

Do I pay the broker directly?

Usually not. The standard model is commission paid by the insurer out of the premium you are quoted — there is no separate broker charge unless a fee has been agreed, and any fee must be disclosed and agreed before you commit.

Can I ask my broker what commission they earn?

Yes, and you should feel free to. Commercial customers are entitled to ask for details of the commission a broker receives on their policy, and a straightforward broker will tell you. Our own policy is disclosure on request.

Is a fee-based broker better than a commission-based one?

Neither model is inherently better; they suit different situations. Fees offer explicit transparency and suit complex work or advisory projects; commission is administratively simple and standard for most placements. What matters in both cases is that you know the basis before you commit and that the broker manages the conflict honestly.

What does ‘whole of market’ actually mean?

That the broker’s recommendation is based on a sufficiently broad analysis of the relevant market for your risk — not that every insurer in existence was approached. A firm claiming it should be able to tell you which markets it considered for your particular risk and why the recommended one won.

Does commission make my insurance more expensive?

Commission is part of how insurers price distribution generally — direct insurers spend the equivalent on marketing and staff instead. What a broker should add for that share of the premium is advice, market access, better-fitting cover and advocacy at claim time. If a broker adds none of those things, that is a broker problem rather than a model problem — and a reason to ask the questions on this page.

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is general information, not advice on a specific policy.