Insurance broker commission on car insurance: who pays it?

A car insurance broker is paid through a commission that the insurer passes on from your premium. You never receive an invoice in the broker's name, but it is your money all the same: the commission is built into the price you pay. It usually runs between 10 and 25% of the premium, and it tells you nothing about the exclusions in the contract you are offered.

I am a broker. Better to put the figures on the table than to let anyone think advice is free.

Who really pays the insurance broker?

On paper, the insurer does. When you sign an omnium contract (Belgian term for comprehensive own-damage cover) through a broker, the insurer pays them a commission every year, for as long as the contract stays in their portfolio. You make no transfer to the broker. But that commission does not fall from the sky: it comes out of the premium you pay the insurer, alongside its management costs, taxes and statutory levies. Saying 'you do not pay the broker', as several comparison sites put it, is accurate in form and misleading in substance.

The nuance matters most when you compare. A premium from a direct insurer contains no intermediary commission, but it does contain other acquisition costs: advertising, an online platform, a call centre. The two prices only compare with identical cover, excesses and limits.

Four channels, four ways of being paid

Broker, agent, bank, direct insurer: the Belgian market sells the same compulsory third-party liability cover through four different doors. Each is paid differently, and that difference decides who helps you when you claim and how many sets of general conditions you see before you sign.

The links between companies and channels come from Test-Achats surveys and the business press; several insurers use two channels at once. For the detail of each status, see broker or tied agent and car insurance through your bank.

How much does a broker earn on car insurance?

No rate is set by law. Belgian comparison sites quote a range of 10 to 25% of the premium, lower for third-party liability and higher for omnium, where the premium and the handling work are heavier.

The most precise figure I found dates from April 2014. Interviewed by the daily La Libre, the head of a brokerage firm mentioned a 'standardised commission' of 17% on motor third-party liability, adding straight away that this was not what the broker 'pockets'. On an average liability premium of €450, the example he gave himself, that comes to about €76.50 a year. With that sum the office pays for the time spent comparing, the paperwork, the staff and the claims follow-up. He also pointed out that in omnium, one contract in five has a claim during the year.

The last two rows are fictional and only give an order of magnitude: the real premium depends on your profile, your car, your postcode and your bonus-malus degree (the Belgian no-claims scale). The actual rate sits in the agreements between your broker and each company, which you can ask about.

Commission or fees: which suits you?

Both models exist under Belgian law.

Commission is invisible and proportional to the premium. Its advantage fits in one line: you pay nothing beyond the premium. Its drawback is the mirror image, because the higher the premium, the more the broker earns, which does not naturally push towards the leanest plan. The law requires the broker to assess your needs and act in your best interest, but the economic incentive does not vanish.

Fees are visible and independent of the contract chosen. A broker paid by the hour or a flat rate has no interest in steering you towards omnium rather than mini-omnium. In practice this model remains rare for a private customer insuring one car; it is mostly found among business brokers, and it then comes on top of a premium from which the commission has sometimes been removed.

Volume bonuses, the blind spot of the debate

People talk a lot about the base rate and very little about the rest. As early as 2014, the same La Libre article described 'over-commissions' paid by some companies to brokers who reach a volume of contracts, and benefits in kind such as trips. The principle has not disappeared; it has been regulated.

The remuneration policy published by a Brussels brokerage illustrates it well: it mentions commissions or fees, but also remuneration 'linked to services provided on behalf of insurers or to overall targets, as well as remuneration linked to claims settlements'. The same document recalls the condition set by the regulatory framework: such payments must improve the quality of the service provided to the client and must not undermine the duty to act in the client's best interest. Nothing in that text is a confession. It simply shows that part of the remuneration does not depend on your contract, but on the broker's weight with a given insurer.

A volume bonus does not make advice dishonest.

It explains why a broker often places most of their contracts with three or four companies, and why the question 'which insurers did you consult for me?' is worth more than a commission rate.

What must you be told before signing?

Since 30 April 2014, the conduct rules derived from the MiFID directive have applied to insurance, motor liability included. They were revised by the Act of 6 December 2018, which transposes the European Insurance Distribution Directive (IDD) and amends the Insurance Act of 4 April 2014; it has been in force since 28 December 2018. According to the FSMA (Belgium's financial services regulator), these rules now cover every distributor: brokers, agents, insurance companies themselves and comparison sites where a contract can be concluded. Before advising you, the intermediary must tell you the nature of their remuneration (fees, commission included in the premium, another benefit, or a combination), and the policies brokers publish provide for full details on request, on a durable medium.

Here are the four documents I would ask any intermediary for, whatever their status:

• Their remuneration policy, in summary and then in detail if you wish: the nature of the remuneration, and whether target-linked bonuses exist.
• The list of insurers consulted for your file, not just the ones they generally work with.
• The general conditions of every contract compared, not only the quote or the sales sheet.
• The product information document, useful for a first read, but never a substitute for the general conditions.

Make these requests by e-mail. A written answer also protects you when you claim, because it proves the duty of advice was met or missed.

Commission does not read the exclusions for you

An identical commission rate can hide two very different contracts. Picture two omnium policies at €900 offered by the same broker and paid the same way. The first excludes headlight lenses from glass cover, the second covers them; the first applies a €500 excess, the second €250. Nothing in the broker's remuneration flags that gap of several hundred euros at the first claim.

That is why I refuse to reduce the choice of an intermediary to how they are paid. Knowing who pays whom tells you where a bias might come from. Reading the policy exclusions tells you whether the contract holds up.

To compare channels on price and service, the article direct insurer, bank or broker sets them side by side. The comparison tool then lines up the cover plan by plan, the ranking of the best car insurers details what each company covers and refuses, and the quiz frames in two minutes the level of cover you need.

The rules for intermediaries are set out in the Insurance Act of 4 April 2014. The FSMA supervises intermediaries and summarised the changes brought by the IDD in its February 2019 newsletter (in French). La Libre's article of 28 April 2014, 'Souffle de transparence sur le monde de l'assurance', reports the 17% liability rate. The remuneration policy quoted is that of the Léon Eeckman brokerage. If a dispute with an intermediary drags on, the Insurance Ombudsman (the free, independent complaints service for the Belgian insurance sector) examines complaints free of charge.

This site informs and compares. It is not an insurance intermediary and gives no individual recommendation: your specific conditions, and only they, prevail.