It’s usual for most brokers to take a small proportion of their earnings directly from the client in the form a fee but in practice, this fee is like an iceberg…
Most of the income for a broker is from insurers. It comes from commission, an Insurer Service Brokerage charge, growth bonuses, retention bonuses, profit shares, work transfer fees and information sharing fees and even fees for a ‘seat’ on the broker’s preferred panel of insurers. The range of fees can expand further where a broker owns another broker, underwriting agency or a Managing General Agent (MGA) through which they place business.
Many of these earnings are not voluntarily declared and so remain hidden. Such background earnings can impact the broker’s placing strategies and can ultimately result in a conflict of interest.
At Risk Factor we keep things simple. We earn most of our money clearly and transparently through fees, avoiding any conflict of interest. We adapt our charging in a way that fits your organisation – fees, hourly rates, share of savings, declared commissions – however it works best for you.