PI broker remuneration explained (UK, 2026): commission, fees, and the wholesale-retail split

Reviewed by Matthew Bartlett, Director · Published 16 July 2026

Broker remuneration is the least-discussed and most-relevant part of the PI placement conversation. Every professional buyer is entitled under ICOBS 4.4 to know how their broker is paid, and where material conflicts might arise from that remuneration. Most buyers do not ask. Most brokers do not volunteer more than the FCA rulebook requires. The result is a market in which commission structures, wholesale-retail splits, profit commissions and delegated-authority arrangements shape placement decisions in ways the buyer never sees. This guide sets out every way a UK PI broker can be remunerated, what ICOBS actually requires the broker to disclose, and what questions a professional buyer should ask before instructing.

The FCA rule that governs disclosure — ICOBS 4.4

ICOBS 4.4 applies to insurance intermediaries dealing with commercial customers. In summary: the broker must disclose the nature and basis of any remuneration received in connection with a contract of insurance. Where a commercial customer requests the amount of remuneration, the broker must disclose that in good time before conclusion of the contract. Where a broker knows that they will receive material remuneration in addition to standard commission — volume overriders, profit share, PSC, or similar — that too must be disclosed on request.

ICOBS 4.1 sits above this with the general fair-dealing overlay. PRIN 8 (managing conflicts of interest fairly) applies at Handbook-principle level. Commercial customers include most professional firms buying PI cover; consumer rules under ICOBS 4.3 apply where the customer is a consumer (rare for PI).

The rule does not require unsolicited amount disclosure in every case. It does require the broker to answer when asked, in writing, before conclusion. The professional buyer's job is to ask.

Commission — how it works and where it varies

Commission is the standard remuneration structure for UK PI brokers. The insurer pays the broker a percentage of the gross premium in return for the broker sourcing, submitting, placing and administering the business. Commission rates on PI vary widely by class and insurer — commonly in a range from around 10 per cent to around 30 per cent, with outliers either side. Rates on scheme business are often lower (the scheme insurer expects volume in exchange). Rates on hard-to-place risks are sometimes higher.

The critical point for the buyer is that commission rates are not uniform across the broker's panel. If Insurer A pays the broker 25 per cent and Insurer B pays 12 per cent on the same risk, the broker has a structural incentive to place with Insurer A unless the broker's placement policy neutralises the incentive. ICOBS 4.4 acknowledges this by requiring disclosure where material conflicts arise. A broker who cannot describe how their placement policy neutralises commission-driven bias has not addressed the conflict.

Fees — when they are appropriate and how they should be documented

Some brokers charge fees to the client instead of, or in addition to, commission. A fee is charged where the broker's time investment is disproportionate to what the commission would fund — complex placements, multi-jurisdiction risks, layered programmes, distressed risks, or where the client specifically prefers a fee model for transparency reasons.

A fee should be documented in the Terms of Business Agreement (TOBA), the demands-and-needs statement, and the placement report. Where a broker charges both a fee and receives commission on the same placement, the total remuneration should be disclosed under ICOBS 4.4. The FCA does not prohibit commission-plus-fee arrangements; it requires transparency.

Volume overriders, profit commissions and PSC

Three additional remuneration structures common in the UK PI market. Volume overriders (VO): the insurer pays an additional percentage on top of standard commission if the broker delivers a certain volume of business to that insurer in the year. Profit commissions: the insurer pays a share of underwriting profit on a book placed with them, calculated after claims and expenses. Profit share commission (PSC): a similar concept structured through a delegated authority binder.

All three create structural incentives that can affect placement decisions. A broker close to hitting a volume threshold has an incentive to route the next placement to that insurer. A broker with a profit commission on a scheme has an incentive to keep the book profitable, which may bias against risky risks going to that scheme. ICOBS 4.4 requires disclosure on request; PRIN 8 requires conflicts to be managed fairly. A well-run broker discloses these arrangements pre-emptively where they may affect placement.

Wholesale-retail splits

Where a placement moves through more than one broker — the retail broker who holds the client relationship and the wholesale broker who accesses the market on the retail broker's behalf — the commission is split between them. Split ratios vary; a common split is around 25-per-cent-to-the-wholesale, 75-per-cent-to-the-retail, but the actual ratio is a matter of commercial agreement between the brokers.

The client-facing question is: does the retail broker retain full remuneration disclosure duties under ICOBS 4.4? Yes. The retail broker's ICOBS obligation runs to the client; the wholesale broker's is downstream. The client is entitled to know the total broker remuneration paid on their placement, not just the retail broker's cut. Ask specifically at placement.

Delegated authority and MGA arrangements

Some brokers hold delegated authority binders from insurers — the insurer authorises the broker to bind risks up to a specific limit on the insurer's paper, within an agreed rate schedule and underwriting appetite. Delegated authority creates additional revenue streams: the broker earns commission, may receive profit commission on the binder, and holds greater workflow control.

Delegated authority is legitimate and can benefit both broker and client (faster quotes, more consistent wordings), but it creates a specific conflict: the broker binding on the insurer's paper is acting simultaneously as the client's agent and as the insurer's authorised representative for the binder. ICOBS 5.3 and 6 set out how this dual-role should be disclosed. A broker operating on a binder should say so, describe the scope of the binder, and confirm which capacity provider stands behind the paper.

Directly authorised vs Appointed Representative — effect on remuneration

Whether the broker is directly authorised (FSMA 2000 s.31) or an Appointed Representative (FSMA 2000 s.39) does not change the client's ICOBS 4.4 rights. Both routes must disclose remuneration on request. What can change is the internal split of remuneration — an AR may share a portion of commission with its Principal firm. The Principal's cut is not itself disclosable to the client under ICOBS 4.4 (it is not remuneration in connection with the contract of insurance from the client's perspective), but a broker acting fairly under PRIN 6 (customers' interests) will explain the AR arrangement if asked.

Insurance Premium Tax and gross-net premium

The premium the client pays is "gross" — it includes Insurance Premium Tax (IPT). IPT on PI cover is at the standard rate (12 per cent as at July 2026; check HMRC current rate). The insurer receives the net premium after IPT is remitted to HMRC. The broker's commission is typically calculated on the net premium unless the TOBA states otherwise. Where a broker quotes a "commission of X per cent" it should be clear whether X is on net or gross premium; a small percentage-point difference is meaningful on larger placements.

What the buyer should ask — a checklist

Six specific questions to ask at instruction and again at every renewal. What is the broker's remuneration on this placement (commission, fee, or both)? What is the commission rate paid by the insurer, and is it consistent across the panel or does it vary by insurer? Are there any volume overriders, profit commissions, PSC, or delegated authority arrangements in place that could affect placement decisions? Is the placement being routed through a wholesale broker, and if so, what is the split and the total combined remuneration? How does the broker's written placement policy neutralise commission bias, and can the policy be shared under NDA? Is the broker acting under a delegated authority binder, and if so, whose paper does the binder sit on?

All six answers should be in writing on broker letterhead within five working days. Written answers are on file at claim stage; verbal answers are not.

Frequently asked questions

Am I entitled to know the exact commission? As a commercial customer under ICOBS 4.4, on request, yes.

Is high commission bad? Not automatically. A hard-to-place risk on niche capacity may attract higher commission than a standard risk on scheme capacity. The question is whether the commission is consistent with the work done and disclosed.

Should I insist on a fee model? Fee models are useful for large or complex placements. Commission models are more common for standard PI. Neither is inherently better; both should be disclosed.

Can a broker refuse to disclose remuneration? Not to a commercial customer who asks under ICOBS 4.4. A broker who refuses is in breach of the rulebook.

Does the broker's commission come out of my premium? Yes. The insurer pays the broker from the premium the insurer receives; the client pays gross premium.

What is a net-rated placement? A placement where the insurer quotes a "net" price and the broker adds their own fee or commission on top. Less common in PI than in some other classes.

How does Consumer Duty change this? Consumer Duty (PRIN 2A) applies in the retail chain and reinforces the disclosure and fair-value expectations. For commercial PI it does not override ICOBS 4.4 but adds a broader value-assessment layer.

Related reading: Broker fees and commissions explained · The UK wholesale PI market explained · Directly authorised vs Appointed Representative · Consumer Duty for professional firms · PI broker selection guide · PI tools hub