Category: Distribution · Reviewed by Simon Temme, Account Executive · Last reviewed 2026-06-05
Volume bonus in insurance is an additional commission payment from an insurer to a broker, conditional on the broker placing a specified volume of business with that insurer over a defined performance period (typically a calendar year). It is a particular form of override commission.
Category: Distribution and intermediation Also known as: Volume override, Volume commission bonus Regulatory basis: FCA Handbook ICOBS 4.3, 4.4; SYSC 19F (remuneration / conflicts); Insurance Distribution Directive Article 17 Related concepts: Override commission, Commission (insurance)
Volume bonus arrangements typically take the form of step thresholds: a flat additional percentage payable once a defined gross written premium threshold is exceeded. For example, an arrangement might pay 0% bonus below £750,000 of placed premium, 1% bonus on premium between £750,000 and £1,500,000, and 2% bonus on premium above £1,500,000. The bonus is typically retrospective, settled by credit note from the insurer after the performance period.
ICOBS 4 disclosure rules apply: commercial customers on request, retail customers automatically (under ICOBS 4.4). The FCA’s particular concern with volume bonuses is the conflict-of-interest risk: the structure may incentivise placement with the insurer offering the volume bonus rather than the insurer providing best cover or value to the client. SYSC 19F requires the broker to identify, manage and (where necessary) disclose such conflicts. The Insurance Distribution Directive Article 17 expressly addresses such structures.
The FCA Pricing Practices Review (2020) and Consumer Duty significantly raised the bar for the documentation of fair-value assessment where volume bonus arrangements are in place.
A regional broker with multiple commercial insurer relationships may have volume bonus structures with several insurers; the broker must ensure that the existence of such bonuses does not distort recommendations to clients away from the best available terms. Conflict management is conducted through documented placement records, an internal conflicts policy, and (in larger broking firms) independent review of placement decisions.
Volume bonuses may be combined with growth bonuses (additional bonus for year-on-year growth) and profit-share elements (bonus tied to loss ratio achievement). Some retail-facing volume bonus schemes have been phased out following FCA enforcement and Consumer Duty pressure.
A broker with £1.8m of professional indemnity insurance placed with Insurer Z under a tiered volume bonus structure (0% under £1m, 1% on £1m-£1.5m, 2% on £1.5m-£2m) would receive £5,000 (£500k at 1%) plus £6,000 (£300k at 2%) = £11,000 volume bonus, payable retrospectively after year-end reconciliation.
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.
Apex Insurance Brokers serves UK professional services firms and commercial businesses. Call 0117 325 0027, email hello@apexinsurancebrokers.co.uk, or request a quotation.
Get a quote