Category: Distribution · Reviewed by Mark Fox, Broker · Renewals · Last reviewed 2026-06-05
Commission in insurance is the remuneration paid by an insurer to an intermediary (broker or agent) for the placement or ongoing service of an insurance contract, calculated as a percentage of premium. Commission remains the dominant remuneration model in UK general insurance and is permitted, subject to disclosure and conflict-of-interest management, under the FCA Handbook.
Category: Distribution and intermediation Also known as: Insurance commission, Broker commission Regulatory basis: FCA Handbook ICOBS 4.3, ICOBS 4.4; Insurance Distribution Directive Article 17 Related concepts: Fee-based (insurance), Override commission, Net-rated commission, Gross-rated commission
Commission is calculated as a percentage of the gross premium (or, in some commercial classes, of the net premium plus broker margin). Typical UK rates in general insurance are 10-20% for personal lines, 15-25% for commercial lines, 17.5-25% for professional indemnity insurance, and 10-20% (or less) for large corporate and Lloyd’s-placed risks. Commission is normally retained by the broker at the point of premium collection and remitted net to the insurer.
The Insurance Distribution Directive Article 17 requires intermediaries to act honestly, fairly and professionally in accordance with the best interests of customers and to manage conflicts of interest, including those arising from commission. ICOBS 4.3 (commission disclosure for commercial customers) and ICOBS 4.4 (commission disclosure for retail customers) implement the disclosure regime. For investment business (IBIPs), most commission was abolished by RDR in 2012.
In the commercial general insurance sector, the Lloyd’s commercial customer commission disclosure regime was strengthened by the Insurance Distribution Directive and by FCA Thematic Review TR19/2.
Standard commission for an SME commercial combined policy might be 22.5%, of which the broker retains the commission as remuneration. Some commercial placements use a transparent fee instead of commission, particularly for very large risks. Where commission is paid, the FCA Pricing Practices Review (2020) and Consumer Duty considerations require fair-value assessment of the commission level in proportion to the service provided.
Gross-rated commission is included in the premium quoted to the client; net-rated commission is added by the broker to a net premium. Override commission is additional commission for volume or scheme business. Profit commission (in reinsurance) is calculated on underwriting profit rather than gross premium.
A £10,000 PI premium for a small surveying firm at 22.5% commission generates £2,250 to the broker. The broker discloses this commission to the client on request (commercial) or, for retail customers, as required by ICOBS 4.4. The Consumer Duty requires the broker to be satisfied that the commission represents fair value in proportion to the placement, servicing and claims advocacy work performed.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-05. Next review: 2026-12-05.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
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