Published rather than disclosed on request
How we are paid
New York requires us to tell you that we are compensated and that you may ask for the detail. Very few agencies volunteer more than that. Here is the whole arrangement, including the parts that are not flattering.
What the carrier pays us, and where that pulls against you. We are paid a commission by the insurance company whose policy you buy, as a percentage of your premium. It varies by carrier, by line of business and sometimes by how much business we place in a year, which means our interests and yours are aligned on most things and not on all of them. New York Regulation 194 requires us to tell you our role, that we are compensated, and that you may ask what we are paid. We would rather publish it than wait to be asked: ask, and you will get the percentage and the carrier in writing before you sign anything.
We are paid a commission by the insurance company whose policy you buy, calculated as a percentage of the premium you were going to pay anyway. We charge you no broker fee, no policy fee, no service fee and nothing for claims work or certificates.
Regulation 194 — 11 NYCRR 30 — requires a New York producer to tell you, at or before application, what their role is, whether they will be compensated by the insurer, that the amount may vary, and that you may request more detail. On renewal you can ask within thirty days either side and must be answered. That is the floor. This page is what we do above it.
The actual numbers
Broadly, personal lines commission runs around eight to fifteen per cent of premium, and commercial lines around ten to twenty. Within that it varies by carrier and by line: some carriers pay more on homeowners than on motor, some pay more on new business in the first year than at renewal.
Ask what we are being paid on your policy and you will get the percentage and the carrier's name in writing before you sign anything. Not a range, not a description — the figure. We would rather publish the general shape here and answer the specific question than treat it as something you have to prise out of us.
Contingent commission, which is the part nobody mentions
Some carriers pay agencies an additional contingent or profit-sharing commission at the end of the year, based on the volume of business placed with them and on how profitable that book turned out to be. It is legal, it is common, and it is not tied to any individual policy.
It is also the clearest structural conflict in this business, and it deserves to be named rather than buried. An arrangement that pays an agency more for sending more business to one carrier is an arrangement that rewards steering. And an arrangement that pays more when the book has fewer claims is one that could, in principle, reward an agency for being unhelpful at claim time.
Our answer to the second half is structural rather than a promise: we take no fee for claims work, and we escalate claims in writing. Our answer to the first half is that we tell you which carriers were approached and what each quoted, so you can see the shape of the recommendation rather than only its conclusion. If you want to know whether we hold a contingent arrangement with the carrier being recommended, ask, and the answer will be straight.
Where our interests and yours line up, and where they do not
They line up more than people expect. Commission is a percentage of premium paid for the year, not for the sale, so an agency that places business badly and loses it at renewal earns less than one that places it well. Keeping you is worth more than winning you, which is why the renewal and claims work is not charity.
They diverge in three specific places, and we would rather write them down. Higher premium means higher commission, so we have a financial interest in more cover — read our recommendation to raise a limit knowing that, and ask us to justify it in claim terms. Permanent life insurance pays very much more than term for the same conversation, which is why that page carries its own warning. And a policy moved is new business, which frequently pays more than a renewal — which is why we write down when the right answer is to stay put.
What we do not do
We charge no fee on top of premium. Beyond the fact that we do not want to, a fee charged in addition to a filed premium that already contains our commission runs into the rate-filing provisions of the Insurance Law, and the Department has taken a dim view of it. Where any broker fee is charged in New York it must be disclosed and agreed in writing in advance — if another agency has charged you one, that is the standard it had to meet.
We take no fee for claims work either, and that one is not only principle: charging for claims advocacy would put us into public adjuster territory, which is separately licensed by the Department and which we do not hold.
And we accept no gift, prize or inducement arrangement in either direction — not offered to you, and not taken from a carrier in exchange for placement. That has its own page too.
In order
How this works in practice
At or before application
You are told our role, that the carrier compensates us, that the amount varies, and that you may ask. Regulation 194 requires this much.
If you ask, before you sign
The percentage and the carrier, in writing. Regulation 194 requires an answer; it does not require us to make it easy, and we do.
On the proposal
Which carriers were approached and what each returned — so the recommendation can be checked rather than trusted.
At renewal
You may ask again within thirty days either side of renewal and we must answer. In practice we would rather you never had to ask.
Questions we are actually asked
How we are paid — frequently asked
How much commission do you make on my policy?
Between roughly eight and twenty per cent of the premium depending on the line and the carrier. Ask about your specific policy and you will get the exact percentage and the carrier in writing before you sign. New York requires us to answer that question; it does not require us to volunteer it, which is why so few producers do.
Do you charge a broker fee?
No. No broker fee, no policy fee, no service fee, and nothing for certificates or claims work. Where a broker fee is charged in New York it has to be disclosed and agreed in writing in advance, and it sits on top of a premium that already contains a commission.
What is contingent commission?
An extra payment some carriers make to an agency at year end based on how much business was placed with them and how profitable it proved. It is legal and common, and it is the clearest structural conflict in this trade. Ask whether we hold one with the carrier we are recommending and you will get a straight answer.
Does it cost me more to use an agency than to buy direct?
No. The commission is inside the carrier's filed rate whether a producer is involved or not, so buying direct does not remove it — it simply means nobody is acting for you in exchange for it. That is the strongest argument for using an independent agency and it is worth understanding rather than being told.
Read next
Related reading
Bring the declarations page and we will read it with you
Ask us what it would cost
Send or bring the summary pages of what you already have — those two sheets are where most of the useful conversation is. We will tell you what we would place it with and what that would cost, what we are paid for doing it, and whether you should move at all. Quite often the answer is that your current policy is priced fairly and you should keep it, and that is an answer we give in writing like any other.