With a commission broker, the insurer pays the broker a percentage of your premium, so the broker's income rises when your premium rises. With a flat-fee broker, you agree a fixed fee at renewal and it does not change with your premium. Both models can be legitimate. The difference is whose interests the pay structure rewards, and how visible the cost is to you. WithCoverage agrees a flat fee at renewal. The 20 to 40% average savings clients see come from remarketing and restructuring their programs, not from the fee model itself. to see what your current broker costs.
Commission vs flat fee at a glance
The two models differ less in what the broker does than in who pays, when, and what the broker gains when your premium moves.
| Commission broker | Flat-fee broker | |
|---|---|---|
| Who pays | The insurer, built into your premium | You, as an agreed fee |
| Changes with premium | Yes | No |
| Visibility of broker pay | Often not itemized | Stated up front |
| Incentive | Higher premium means higher pay | Neutral to premium |
| Typical risk | Little reason to push premium down | The fee has to be justified by results |
| Best fit | Small, simple programs | Mid-market programs with a larger or growing premium |
How much commission does an insurance broker make?
On commercial policies, brokers typically earn a commission of 15% to 25% of premium, depending on the line of coverage, the carrier and the size of the account. Large or negotiated accounts can carry lower percentages.
Commission is only part of what a broker can earn. Many also receive contingent commissions, which carriers pay based on the volume or profitability of the business a broker places with them. Rates vary by carrier, line and state, so the only way to know your number is to ask your broker in writing.
What happens to broker pay as your premium grows
Commission is a percentage, so it grows in step with your premium. Commissions on commercial lines run 15% to 25% of premium, so the example below uses the low end, 15%. A flat fee is agreed at renewal and stays the same when the premium moves.
| Annual premium | Broker pay on commission (15%) | Broker pay on a flat fee |
|---|---|---|
| $500,000 | $75,000 | One fee, set at renewal |
| $2,000,000 | $300,000 | The same fee as before |
When the premium quadruples from $500,000 to $2 million, the commission quadruples with it, from $75,000 to $300,000. The flat fee does not move. That is why the gap between the two models tends to widen as a business grows, adds locations, or takes on more risk.
WithCoverage agrees its flat fee at renewal, and that fee does not rise when your premium does. We share the fee for your program during the review rather than publishing a rate card, because it depends on the size and complexity of the program.
How do you find out what your broker earns?
Many business owners have never seen their broker's compensation itemized. You are entitled to ask, and the best time is before renewal, while you can still act on the answer.
- Ask in writing. "What compensation do you receive from carriers on each policy, including commissions, contingent commissions and fees?"
- Check your documents. Look for commission and fee line items on policy documents and invoices.
- Get the answer before renewal. That leaves time to compare it with a second opinion.
When commission makes sense
Commission is not inherently wrong. For a small, simple program, a commission built into the premium can be the easiest arrangement. What matters is that the structure is disclosed and that you know what the broker earns.
WithCoverage also works on commission when a client prefers it or state law requires it, and we disclose the structure before work begins.
How is WithCoverage different from a traditional insurance broker?
Most brokers are paid a percentage of your premium, so their pay rises when your bill does. WithCoverage agrees a flat fee at renewal, so we don't earn more when you pay more.
The working model is different too. We take your program to 40+ carriers and have them compete on price and coverage, our team reads every policy line by line and benchmarks it against similar companies, and you work with a named risk manager backed by insurance attorneys, claims managers and loss control specialists. Policies, claims, certificates and renewals all live on one platform instead of in email threads and PDFs.
What clients say about flat-fee brokerage
“We saved $600K switching to WithCoverage, as they dramatically reduced premiums, eliminated unnecessary policies, and aligned incentives via a Flat Fee Model.”
“The largest brokerages told us what we needed was either impossible or would take several quarters. WithCoverage got it done, exactly the way we wanted, on a transparent flat fee.”
“Their flat-fee model means their incentives are aligned with ours.”
Frequently asked questions
Is a flat-fee insurance broker cheaper than commission?
Not always, but often for larger or growing programs. A commission rises with your premium, while a flat fee stays fixed, so the flat fee tends to cost less as the premium grows. Compare total cost, meaning premium plus everything the broker earns.
How do insurance brokers get paid?
Most brokers are paid a commission by the insurer, typically 15% to 25% of your premium. Some also earn contingent commissions tied to the volume or profitability of business they place with a carrier, or charge fees. A flat-fee broker is paid an agreed fee instead.
How do I know if my broker is earning commission on my policy?
Ask in writing what compensation they receive from carriers on each policy, including commissions, contingent commissions and fees. Then check your policy documents and invoices for commission and fee line items.
Can I switch brokers mid-term?
Usually yes. You move your policies to a new broker by signing a broker of record letter, though some carriers only accept one in a window before renewal, and each gives the incumbent a few days to respond. A flat fee itself is agreed at renewal. Our guide to switching brokers walks through the timeline.
Do flat-fee brokers have access to the same carriers?
Carrier access depends on a broker's appointments and relationships, not on how the broker is paid. WithCoverage takes programs to 40+ carriers and has them compete on price and coverage.
See what your current program really costs
A free insurance program audit. No cost, no agreement, and it works alongside your current broker, who isn't notified.
Sources
This guide is general information, not legal advice. Broker compensation disclosure rules vary by state.