Category: Distribution · Reviewed by Simon Temme, Account Executive · Last reviewed 2026-06-05
Fee-based remuneration in insurance broking is an arrangement under which the broker is paid a fee, normally negotiated and agreed with the client, in lieu of, or in addition to, commission from the insurer. The fee model is the dominant remuneration arrangement for very large corporate placements, complex specialty risks, and consultancy work.
Category: Distribution and intermediation Also known as: Fee-based broking, Broker fee Regulatory basis: FCA Handbook ICOBS 4.3, ICOBS 4.4; Insurance Distribution Directive Article 17, 19 Related concepts: Commission (insurance), Insurance broker
Fee-based broking arrangements involve a contractually agreed fee paid by the insured client to the broker, typically expressed as a fixed sterling amount or as a percentage of premium. Fee-based arrangements are common where the client wishes to avoid the potential conflict of interest inherent in commission, where the placement is very large (so commission would be disproportionate), where significant non-placement consulting is provided, or where regulatory or stakeholder considerations (e.g., charity sector) make fee transparency preferable.
In some markets the fee replaces commission entirely (with insurers issuing “net” policies); in others, commission is retained and offset against the fee due, with disclosure of the offset.
The FCA Handbook does not prescribe a particular remuneration model. ICOBS 4.3 requires disclosure of fees to commercial customers on request, and ICOBS 4.4 requires automatic disclosure of fees to retail customers. The Insurance Distribution Directive Articles 17 and 19 require honest, fair and professional conduct, conflict-of-interest management, and remuneration disclosure. The Consumer Duty additionally requires fair-value assessment of fees in proportion to the service.
A typical large-corporate placement on a fee basis might involve the client paying an annual broker fee of £150,000-£500,000 covering placement, mid-term servicing, claims advocacy and risk consulting; with the broker accepting net policies from underwriters and not receiving (or refunding) any commission income. The fee structure is agreed in a broker engagement letter at the outset of the relationship and reviewed annually.
For SME and mid-market commercial business, hybrid arrangements are common: commission for the placement, supplemented by a fee for additional consulting work.
A “transparent fee” arrangement involves the broker disclosing all commission received and offsetting it against the fee. A “commission-plus-fee” arrangement involves both. A “consultancy fee” is a fee for specific advisory work outside the placement remuneration. A “claims advocacy fee” is a separate fee for major claims handling.
A FTSE 100 corporate insurance programme placement might involve an annual broker fee of £350,000, with all UK and international policies placed on net terms (no commission to broker) and the broker providing programme design, market access, captive management, claims advocacy and risk consulting against the agreed fee.
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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