How does an insurance broker or agent get paid?

How does an insurance broker or agent get paid?

Sam Friedman (Editor-in-Chief, National Underwriter, Property & Casualty Edition) gives expert video advice on: Do I need insurance?; How much insurance do I need? and more...

An insurance agent or broker is normally paid on commission. The commission is paid by the insurance company where they place the business and it is billed into the premium. In other words, the buyer doesn't see any sort of a surcharge and it's not like a restaurant where we have to add 15% for tip or anything like that. An insurance agents commission usually will range from anywhere between 8 to 15% depending on what their relationship is with the carrier. Occasionally there are some bonus commissions that are paid to the insurance agents and brokers, which are usually based on the profitability of the agent's book of business so it's in the agent's interests to try to help you limit the losses as much as possible so that they benefit as well.