Broker economics · PI
How UK PI insurance brokers earn money — and what they must disclose
Reviewed by Matthew Bartlett, Director, Apex Insurance Brokers Limited · Published 14 July 2026
Understanding how your PI broker earns is not just curiosity — it is the foundation of the Consumer Duty fair-value assessment and, for commercial customers, an entitlement under ICOBS 4.4. This page explains the three broker remuneration models, what UK rules require to be disclosed, and how to test whether the number is fair.
The three ways UK PI brokers earn
- Commission from the insurer. The insurer pays the broker a percentage of the premium at binding. Typical PI commission ranges from 12.5% to 25% of the annual premium depending on class, complexity and market convention.
- Broker fee charged to the client. Separate fee agreed with the client, sometimes in addition to reduced commission, sometimes instead of it.
- Hybrid. A mix — commission for standard placements, additional fee for complex advisory or difficult-risk work.
What UK rules require to be disclosed
- ICOBS 4.4 — commercial customers are entitled, on request, to know the nature and amount of the broker's remuneration in respect of the contract.
- Consumer Duty (PRIN 2A) — fair-value assessment includes total distribution costs. Broker commission and fees must be part of the value case.
- IDD (Insurance Distribution Directive) — requires disclosure of the basis of remuneration (commission vs fee) and any conflicts of interest.
- Retail-customer disclosure — more prescriptive; retail-consumer transactions require the IPID and demands-and-needs statement.
What ‘fair’ commission looks like for PI
- Standard PI placements — 12.5-20% commission is market norm.
- Complex or difficult-risk placements — 15-25%, reflecting the broker's additional presentation and market-navigation effort.
- Volume schemes — lower commission (often 10-15%) in exchange for scale.
- Wholesale placements via Lloyd's — the retail broker's commission plus a wholesale broker's commission stack; total may be higher.
- Advisory work outside of placement — charged as a separate fee.
When to ask for the disclosure
- At initial quote — ask what commission or fee is embedded in the number.
- At renewal — confirm whether commission has changed.
- If premium has risen — test whether the increase is insurer-driven or commission-driven.
- If Consumer Duty implementation review is due — the disclosure supports the fair-value assessment.
- Whenever you are comparing two broker quotes on the same insurer — commission difference explains most premium differences.
Commission-stacking — the wholesale question
In a wholesale placement, both the retail broker and the wholesale broker earn commission on the same policy. Total commission stack can reach 25-35% in complex layered programmes.
This is not automatically improper — wholesale brokers add value through Lloyd's market access. But it is a legitimate area to test. Ask: is the wholesale route necessary, and what does the wholesale broker do for the additional commission?
How to test whether you are paying too much
- Ask two or three brokers to quote the same insurer. Different commissions = different final premiums.
- Ask for the commission disclosure in writing at initial quote.
- Compare commission percentage to industry benchmarks (12.5-25% typical).
- Test whether a fee-based advisory model would be cheaper for advisory-heavy work.
- Consider whether a specialist broker's wholesale market access justifies a slightly higher total distribution cost.
Fee-based advisory — when it makes sense
- Complex layered PI programmes for large firms — advisory value outweighs pure commission economics.
- Difficult-risk placements needing extensive presentation work.
- Multi-jurisdictional cover where the broker is co-ordinating several markets.
- Firms with strong preference for transparent hourly-billed advice rather than embedded commission.
- Broker's scope extends beyond placement — claims advocacy, policy review, coverage disputes.
Frequently asked
Am I entitled to know what my PI broker earns?
As a commercial customer, yes — ICOBS 4.4 requires disclosure on request. As a retail customer, more prescriptive disclosure applies. Consumer Duty makes this the practical norm regardless of formal category.
What is typical PI broker commission in the UK?
For standard PI, 12.5% to 20% of annual premium. Complex or difficult-risk placements 15% to 25%. Volume schemes 10% to 15%. These are industry norms, not fixed rates.
Do brokers earn more if they place with a specific insurer?
Not typically. Volume overrides, contingent commissions and profit-shares exist in some segments but are declining under Consumer Duty scrutiny. Ask specifically about any contingent arrangements.
What is a wholesale broker and why do they earn commission too?
Wholesale brokers place risks into Lloyd's or other specialist markets that retail brokers don't access directly. They earn commission for the market-access work. In complex placements the total commission stack (retail + wholesale) can be 25-35% but reflects the additional route to specialist capacity.
If I pay a broker fee, do they still earn commission?
Depends on the contract. Some arrangements are pure fee (broker rebates commission to zero). Some are hybrid (reduced commission plus fee). Ask specifically in writing before appointing.
How does Consumer Duty affect broker commission?
Consumer Duty requires distributors to assess fair value across the whole distribution chain. Broker commission that materially exceeds value delivered may fail the assessment. It doesn't prescribe a specific rate but it does require documented justification.
Can I negotiate my broker's commission?
Sometimes. On large accounts, on multi-year deals, or where the client has scale, negotiation is common. On smaller accounts the negotiation typically produces limited movement — the underlying premium is where more meaningful savings usually sit.
Should I appoint a broker who is a partner of my other advisers (accountant, solicitor)?
A referral is fine as a starting point but does not remove the need to check the broker's PI-specific credentials. The broker earning a referral commission or partnership benefit does not change the ICOBS 4.4 disclosure duty.