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How do insurance brokers get paid in NZ?

Insurance Broker Pay

Insurance brokers in New Zealand primarily earn through two methods: either by receiving commissions from insurance companies when they place a policy for a client or by charging an agreed fee for policy placement. Some brokers might also add predetermined administrative fees.

Why do insurance brokers get paid in these ways?

Insurance brokers serve as intermediaries, bridging the gap between insurance companies and those in need of insurance. Their compensation structure is reflective of the services and expertise they bring to the table.

To Compensate for Expertise and Service

Brokers offer invaluable guidance to their clients, using their expertise to find the best insurance deals and the right fit for their clients' needs.

For Ensuring Client Interests

Since the insurance industry can be complex, brokers play an essential role in representing the client's interests, ensuring they get the best possible insurance coverage.


Charging fees or earning commissions allows brokers to sustain their businesses, continue offering their services, and maintain high industry standards.

What are the specific ways brokers get paid?

  • Commissions from Insurance Companies: When brokers connect their clients with an insurance company and a policy is placed, they earn a commission. This is a percentage of the premium and is paid by the insurance company.
  • Agreed Fee on Policy Placement: Some clients prefer a fee-based model. Here, the broker and the client agree upon a fee for the broker’s services irrespective of which insurance product is chosen.
  • Administrative Fees: On top of the above, some brokers charge a predetermined fee to cover administrative tasks related to managing and placing insurance policies.

What Exactly are Commissions and Fees?

  • Commissions: These are typically a percentage of the premium that the client pays to the insurance company. It’s a reward to the broker for connecting the client with the insurer, providing advice & facilitating the deal.

  • Fees: Fees are agreed-upon amounts that the client pays to the broker for specific services, such as placing a policy or providing consultation.

What are the advantages and disadvantages of a this payment structure?

  • Transparency: Clients often understand upfront how brokers will be compensated, either through a percentage commission or a set fee.

  • Flexibility: The dual-structure allows brokers to cater to various clients and scenarios, offering customized solutions when needed.

  • Sustained Business Model: The commission structure ensures that brokers have a vested interest in the client’s long-term satisfaction with their policy.

  • Potential Bias: There could be a perception that brokers might favor policies that offer higher commissions, although professional brokers always prioritize the client’s best interests.

  • Costs to Client: While commissions are built into premiums, additional fees might increase the overall cost for the client.

Common Misunderstandings

  • “Brokers Always Choose the Highest Commission”: Ethical brokers prioritize client needs over potential earnings. Their reputation and client satisfaction are paramount.

  • “Fees are Unnecessary”: Fees often cover the additional services and expertise that brokers provide, ensuring the client gets the best possible advice and policy options.

How Can Gerrards Help?

As specialists in business insurance in New Zealand, Gerrards understands the intricacies of the insurance world. Our team:

  • Offers Expert Guidance: Navigating the vast world of business insurance can be challenging. We provide expert insights tailored to your needs.

  • Prioritizes Transparency: We are open about our compensation, ensuring there are no surprises for our clients.

  • Focuses on Your Needs: Our goal is to find the best policy for you, irrespective of commissions. Your satisfaction and protection are our top priorities.

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