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📋 '''Broker compensation disclosure''' is the practice — and in many jurisdictions the legal requirement — by which an [[Definition:Broker | insurance broker]] reveals to its client the nature, source, and amount of all compensation the broker receives in connection with an [[Definition:Insurance | insurance]] placement. Born out of regulatory scrutiny over potential [[Definition:Conflict of interest | conflicts of interest]], particularly after the Spitzer investigations of 2004–2005, the concept is central to modern insurance distribution governance and reflects the expectation that buyers deserve full visibility into the economic incentives shaping a broker's recommendations.

⚙️ Disclosures typically cover base [[Definition:Brokerage commission | commissions]] paid by the [[Definition:Insurance carrier | carrier]], [[Definition:Contingent commission | contingent commissions]], profit-sharing arrangements, [[Definition:Override commission | overrides]], and any fees charged directly to the client. Depending on the regulatory regime, the broker may be required to present this information before the placement is bound, at the time of [[Definition:Policy renewal | renewal]], or upon the client's request. In the [[Definition:Lloyd's of London | Lloyd's]] market, [[Definition:Managing agent | managing agents]] and brokers must comply with specific [[Definition:Market reform | market-reform]] standards that embed compensation transparency into the [[Definition:Slip | slip]] and [[Definition:Market reform contract (MRC) | contract]] documentation. Several U.S. states mandate written disclosure statements, and large commercial clients increasingly demand them as part of their vendor-management protocols.

🎯 Robust disclosure practices strengthen trust between brokers and [[Definition:Policyholder | policyholders]] and reduce the risk of regulatory sanctions or [[Definition:Errors and omissions insurance (E&O) | E&O]] claims alleging that a broker steered business based on compensation rather than client need. For [[Definition:Underwriter | underwriters]], transparent compensation structures simplify negotiations and help ensure that acquisition costs are clearly understood at the point of [[Definition:Underwriting | risk assessment]]. As digital platforms and [[Definition:Insurtech | insurtech]] distribution models make pricing more visible to end buyers, brokers who proactively disclose compensation position themselves as trusted advisors rather than opaque middlemen — a strategic advantage in an increasingly competitive market.

'''Related concepts'''
{{Div col|colwidth=20em}}
* [[Definition:Broker compensation]]
* [[Definition:Brokerage commission]]
* [[Definition:Contingent commission]]
* [[Definition:Conflict of interest]]
* [[Definition:Broker remuneration]]
* [[Definition:Regulatory compliance]]
{{Div col end}}

Definition:Broker compensation disclosure - Revision history

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