Insurance Broker Compensation: What You Need to Know

Chris Freitas • 16 July 2024

At KBI Benefits, we believe in transparency regarding our stake in our client relationships. We aim to build a solid foundation of trust with our clients by providing clear and honest information about our compensation structure and motivating factors as employee benefit insurance brokers. 


The Role of an Insurance Broker 

An insurance broker acts as an intermediary between consumers and insurance companies. Unlike insurance agents who represent insurance companies, brokers represent the interests of consumers. Our primary goal at KBI Benefits, as an insurance broker, is to help our clients find the best employee benefits policy tailored to their specific needs. 

Importantly, brokers cannot bind coverage; this is a role reserved for insurance agents and insurance companies. Our job is to provide expert advice and guidance to help you find the right coverage, ensuring that you can make informed decisions about your employee benefits policies. Speak with a KBI Benefits agent today to schedule an audit of your employee benefits spending. 


The Role of an Insurance Agent 

In contrast to insurance brokers, insurance agents work directly for insurance companies. They have the authority to complete insurance sales and bind coverage. 


While agents play a crucial role in the insurance process, their primary allegiance is to the insurance company they represent. This distinction is vital as it influences the kind of advice and service clients receive. 

 

How Do Insurance Brokers Get Paid? 

To build trust through transparency, here are the methods that our insurance brokers get paid: 


Commissions 

The most common way insurance brokers earn money is through commissions from selling insurance policies. These commissions are typically a percentage of the policy’s total annual premium, ranging from 2% to 8%, depending on state regulations and the specific insurance product. At KBI Benefits, we are committed to ensuring that our clients understand this compensation structure clearly right out of the gate so you know where your money is being allocated. 


Consultative and Advisory Services 

In addition to commissions, brokers can earn income by providing consultative and advisory services. These services might include personalized advice on choosing the right insurance plan, assistance with claims, and other related tasks. In some cases, brokers may charge transactional fees for specific services, such as initiating changes to a policy or helping to file claims. 

 

Residual Income 

Many brokers also earn residual income. This is a smaller, ongoing payment received over the life of the policy. This structure incentivizes brokers to maintain strong, long-term relationships with their clients, ensuring that they continue to provide excellent service and support. 


State Regulations and Fees 

State regulations govern how and when brokers can charge fees. These fees must be reasonable and agreed upon by both the client and the broker. At KBI Benefits, we adhere strictly to these regulations, ensuring that all our charges are transparent and justified. 


 

The Bottom Line 

There are many types of employee benefits insurance and numerous insurance companies to choose from, making the process of selecting the right policy quite challenging. An insurance broker like KBI Benefits takes on the responsibility of researching and guiding clients through this complex landscape. 

At KBI Benefits, we are proud to be an insurance broker that puts our clients' needs first. Our transparent approach to compensation, combined with our dedication to providing expert, unbiased advice, sets us apart in the industry. Speak with a KBI Benefits agent today to discover how your business could save up to 40% on your annual employee benefits coverage. 

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