Insurance Brokers

[@HeatherSmithAU]

Hi

I am just doing some research for something I am writing and hope someone knows the answer.

How do Insurance Brokers make their money these days.

I now there was talk of changes in the industry.

Do they earn money from a trailing commission, an upfront payment, or some other mechanism?

Thanks in advance,

[Aidan]

Hi Heather,

I used to work in reinsurance once upon a decade or two and in large industrial property and casualty insurance the broker charged a fee for their services. Brokers would pitch to the clients and compete on program structure, likely insurance market pricing and their proposed fee.

Not a million miles from how advertising agents pitch...

(for the benefit of the bewildered 'reinsurance' is the business of insuring the insurance companies)

[mercedario]

Heather

For General Insurance (insurance products other than Life/TPD/Income etc).

Insurance brokers can earn remuneration a number of ways;
1. Commission/brokerage
2. An agreed fee with the client
3. In some cases, a fee as well as commission/brokerage

Commission/brokerage is only paid after a successful transaction, a fee may or may not be payable regardless of the success of the transaction (it will depend upon what has been agreed with the client in advance).

The remuneration structure of a transaction will depend upon the product being sold, complexity, premium involved and ultimately what the client is comfortable with.

Small one-off transactions are likely to be on a commission basis, larger more complex/expensive transactions are likely to be on an agreed fee basis.

Hope this helps

[@HeatherSmithAU]

Thanks Mercedano & Aidan, your information was very useful, Heather

[flower-child]

not sure if you still need the info, but I paid my broker an agreed amount.