Risk Advisory Services has reviewed corporate insurance programs where businesses believed they had negotiated a transparent, fee-only arrangement.

They had not.

The broker’s fee was clearly stated, approved and included in the annual insurance budget. Yet commission was still being earned through the insurance premium.

The broker received the agreed fee and additional commission.

The client paid both.

This happens more often than many corporate insurance buyers realise and, on a large insurance program, the amounts involved can be substantial.

Not all brokers operate this way. Many provide genuine value, disclose their remuneration clearly and act in their clients’ best interests.

But every corporate client has the right to know exactly how much is being earned from its insurance program, who is receiving it and where that money comes from.

The great broker remuneration debate

Broker remuneration has recently been heavily debated across the insurance industry, although many corporate clients may not realise there is a debate at all.

Insurance brokers may be paid through a direct fee charged to the client, commission built into the insurance premium, or a combination of both. The debate centres on how clearly those payments should be disclosed, and whether clients should have to ask before being told.

Much of the current discussion has emerged through the latest review of the Insurance Brokers Code of Practice. The Code is administered by the National Insurance Brokers Association, or NIBA, the industry body representing insurance brokers in Australia. It sets voluntary standards of conduct for NIBA members and other broking businesses that subscribe to it.

Remuneration disclosure has been a recurring point of contention. During the previous code review, proposals to extend commission disclosure to small business clients were resisted by parts of the broking industry and ultimately left out of the 2022 Code.

As part of the latest review, NIBA appointed Phil Khoury, a specialist in governance, industry codes and regulatory systems from consultancy crkhoury, to independently assess whether the Code remained fit for purpose and met the expectations of clients, regulators and other stakeholders.

Khoury recommended that brokers disclose fees and commissions to all individual and small business clients, regardless of the insurance product involved. NIBA initially supported broader disclosure in January 2026, but the requirement was not included in the draft Code released in July.

The decision attracted strong criticism. Insurance Brokers Code Compliance Committee chairman Oscar Shub questioned why brokers would be afraid of disclosing their remuneration, while industry expert John Trowbridge argued that broker self-interest had contributed to gaps in the proposed Code.

NIBA’s position is that clients can request information about broker remuneration.

But how can a client ask about a payment they do not know exists?

How can commission remain hidden?

A separately negotiated broker fee does not automatically mean the insurance premium has been quoted without commission.

Unless the insurer’s quotation clearly states that the premium is net of brokerage, commission may still be included within the amount paid by the client. That commission is then passed from the insurer to the broker, rather than appearing as a separate line item on the client’s invoice.

This is why the arrangement can be difficult to detect. The client sees the broker fee, but not necessarily the additional remuneration contained within the premium.

A fee-only arrangement should mean exactly that. The premium should be net of commission, and any other remuneration connected with the account should be clearly disclosed.

What does the fine print actually permit?

If a broker receives both a fee and additional remuneration, the arrangement may be permitted by the broker service agreement.

Many agreements contain broad clauses allowing the broker or its related entities to receive commissions and other payments connected with the client’s insurance program. These may include administration fees, referral payments, facility income or payments received through underwriting agencies and premium funding arrangements.

This can make the broker’s total remuneration difficult to identify. The lead broker may disclose its direct fee while other income is earned elsewhere within the placement or broader corporate group.

A clause stating that the broker may receive commissions or other remuneration might legally authorise these payments. But it does not necessarily tell the client who was paid, how much was earned or whether the payment was funded through the premium.

There is a significant difference between permitting additional remuneration in the fine print and clearly disclosing the total amount earned from the client’s insurance program.

The issue is not simply whether the payment was allowed. It is whether the client properly understood the arrangement.

Hidden remuneration creates more than a financial problem

The most immediate concern is cost, but the broader issue is transparency.

Insurance brokers are engaged as professional advisers. They assess risk, approach insurers, compare policy terms and recommend how the insurance program should be structured.

Most brokers take that responsibility seriously.

However, when additional remuneration is not clearly disclosed, the client cannot fully understand the commercial interests connected with the advice it receives.

A brokerage may receive different levels or forms of remuneration depending on the insurer, underwriting agency, facility or premium funding arrangement involved. That does not mean the recommendation was inappropriate. But the client should be able to see whether any financial benefit sits behind the options being presented.

Clear disclosure allows the business to assess the advice with the full picture in front of it.

It also protects brokers that are acting in their clients’ best interests by demonstrating that their remuneration is transparent and their recommendations can be assessed on their merits.

Find out exactly what you are paying for

Corporate clients do not need to wait for NIBA, a revised industry code or legislative reform.

They can examine their own arrangements now by requesting:

• A total remuneration statement: Ask your broker to disclose all income earned from the insurance program, including payments received by related entities, underwriting agencies, facilities, wholesalers and premium funders.
• Written confirmation that premiums are net of commission: Every insurer quotation should clearly state whether brokerage has been removed. Do not assume a premium is net simply because you pay a separate broker fee.
• Disclosure of related-party arrangements: Ask whether any recommended underwriting agency, facility, service provider or premium funder is owned by, associated with or commercially connected to the brokerage group.
• A review of the broker service agreement: Identify clauses that permit commissions, contingent payments, referral income or other indirect remuneration. Broad permissions should be replaced with clear disclosure and approval requirements.
• An independent assessment: Have someone outside the broking relationship examine the policy schedules, quotations, invoices and relevant agreements.

The challenge is that the full picture is rarely contained in one document. Relevant information may be spread across policy schedules, quotations, invoices and broker agreements. Without specialist insurance knowledge, it can be difficult to identify missing information, trace how remuneration flows through the program or determine whether brokerage remains built into the premium.

Risk Advisory Services gives corporate clients a clear and independent view of the true cost and structure of their insurance programs. This helps businesses identify hidden remuneration, strengthen oversight of broker arrangements and make more informed decisions about where their insurance spend is going.

It also gives CFOs, executives and risk managers greater confidence that broker remuneration is transparent and aligned with the interests of the business.

Transparency should not be controversial

Brokers are entitled to be paid fairly for their expertise, advice and work. Good brokers add significant value through market knowledge, policy negotiation, claims support and risk advice.

The issue is not whether brokers should earn money.

The issue is whether clients know how much is being earned from their insurance program, who is receiving it and where that money comes from.

Risk Advisory Services has seen how significant the gap between disclosed fees and total remuneration can become.

These were not minor discrepancies. They materially changed each client’s understanding of what its broking arrangement was costing.

That level of transparency would be expected in any other major corporate advisory relationship. It should be no different in insurance.

The current debate around the Insurance Brokers Code of Practice should be a warning for corporate buyers. A fee arrangement is not necessarily transparent simply because the fee itself is disclosed.

Corporate clients need to ask the right questions, understand the full remuneration structure and make disclosure a contractual requirement.

Most importantly, they need to confirm that a fee-only insurance program really is fee-only.

Are you paying both a broker fee and a commission?

For a free, no-obligation chat about how we can help solve any Insurance and/or Risk Management problem your organisation needs help with, simply reach out to us today.