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🏷️ '''Brokerage commission''' is the percentage-based fee an [[Definition:Insurance carrier | insurance carrier]] or [[Definition:Underwriter | underwriter]] pays to an [[Definition:Broker | insurance broker]] for successfully placing a [[Definition:Risk | risk]] and bringing [[Definition:Premium | premium]] to the insurer's book. It represents the most common and visible component of [[Definition:Broker compensation | broker compensation]] and is typically deducted from the gross premium before the net amount is remitted to the carrier, a process sometimes referred to as the broker retaining its commission "off the top."

🔢 Commission rates vary widely depending on the [[Definition:Line of business | line of business]], market conditions, and the complexity of the placement. Standard [[Definition:Personal lines | personal-lines]] products may carry commissions of 10–15 percent, whereas [[Definition:Specialty insurance | specialty]] and [[Definition:Surplus lines insurance | surplus-lines]] placements can command 15–25 percent or more. In the [[Definition:Lloyd's of London | Lloyd's]] market, the brokerage rate is recorded on the [[Definition:Slip | slip]] and the [[Definition:Market reform contract (MRC) | MRC]], making it visible to all subscribing [[Definition:Syndicate | syndicates]]. Where multiple intermediaries are involved — for example, a retail broker working with a [[Definition:Wholesale broker | wholesale broker]] or a [[Definition:Managing general agent (MGA) | MGA]] — the total commission is split among them according to their [[Definition:Terms of business agreement (TOBA) | terms of business]], and the cumulative acquisition cost becomes an important factor in the [[Definition:Underwriting | underwriting]] decision.

⚖️ The level of brokerage commission directly affects an insurer's [[Definition:Expense ratio | expense ratio]] and, by extension, the [[Definition:Combined ratio | combined ratio]] of the business it writes. If commissions are set too high relative to the risk profile, the carrier may struggle to generate an [[Definition:Underwriting profit | underwriting profit]] even when [[Definition:Loss | losses]] are favorable. This tension makes commission negotiation a critical part of the placement process, and it underpins the growing demand for [[Definition:Broker compensation disclosure | compensation transparency]]. For brokers, the commission must be sufficient to cover the cost of servicing the account — including [[Definition:Claims advocacy | claims support]], [[Definition:Policy renewal | renewal]] management, and ongoing advisory work — while remaining competitive enough that the insurer's pricing stays attractive to the [[Definition:Policyholder | client]].

'''Related concepts'''
{{Div col|colwidth=20em}}
* [[Definition:Broker compensation]]
* [[Definition:Broker remuneration]]
* [[Definition:Commission]]
* [[Definition:Expense ratio]]
* [[Definition:Contingent commission]]
* [[Definition:Broker compensation disclosure]]
{{Div col end}}

Definition:Brokerage commission - Revision history

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