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💰 '''Broker commission''' is the compensation paid to an [[Definition:Insurance broker | insurance broker]] for placing business with an [[Definition:Insurance carrier | insurer]] or [[Definition:Reinsurer | reinsurer]], typically expressed as a percentage of the [[Definition:Premium | premium]] written. Unlike [[Definition:Insurance agent | agents]], who usually represent a specific carrier, brokers act on behalf of the [[Definition:Policyholder | policyholder]] and earn their commission from the insurer that ultimately binds the risk — a structure that has long generated debate about potential conflicts of interest across global insurance markets.

⚙️ Commission rates vary widely depending on the [[Definition:Line of business | line of business]], market conditions, and the complexity of the placement. Standard personal lines products might carry commissions in the range of 10–15%, while specialty or surplus lines placements can command significantly higher percentages. In the [[Definition:Lloyd's of London | Lloyd's]] market, broker commission — sometimes called [[Definition:Brokerage | brokerage]] — is explicitly disclosed on the [[Definition:Slip | slip]] and forms part of the placement terms visible to all participating [[Definition:Syndicate | syndicates]]. In reinsurance, commissions are often embedded in structures such as [[Definition:Ceding commission | ceding commissions]] on [[Definition:Treaty reinsurance | treaty]] programs. Some jurisdictions, including the United Kingdom under [[Definition:Financial Conduct Authority (FCA) | FCA]] rules and the European Union under the [[Definition:Insurance Distribution Directive (IDD) | Insurance Distribution Directive]], require brokers to disclose commission arrangements to clients, while in parts of Asia and the United States, disclosure standards vary by state or territory.

🔍 The role of broker commission in shaping market behavior should not be underestimated. High commissions can incentivize brokers to place business with carriers offering the most generous terms rather than the best coverage or claims service — a dynamic regulators have sought to address through transparency requirements and, in some cases, fee-based compensation models. Contingent commissions and [[Definition:Profit commission | profit commissions]], where additional payments depend on portfolio performance metrics like [[Definition:Loss ratio | loss ratios]], add another layer of complexity. As the insurance distribution landscape evolves — with [[Definition:Managing general agent (MGA) | MGAs]], digital platforms, and direct-to-consumer channels gaining share — the traditional broker commission model faces both competitive pressure and regulatory scrutiny, though it remains the dominant form of intermediary compensation globally.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Insurance broker]]
* [[Definition:Ceding commission]]
* [[Definition:Contingent commission]]
* [[Definition:Profit commission]]
* [[Definition:Brokerage]]
* [[Definition:Insurance Distribution Directive (IDD)]]
{{Div col end}}

Definition:Broker commission - Revision history

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