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Are Broker commissions negotiable?


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I am reviewing our 5500s for last year and I noticed that our commissions on the various coverages range from 3% to 15%. I would really like to get that number down, but I don't know if this is something that is generally negotiable on my end as a plan sponsor, or if the carriers determine them without regard.

Thank you.

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... And get multiple quotes.

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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I am reviewing our 5500s for last year and I noticed that our commissions on the various coverages range from 3% to 15%. I would really like to get that number down, but I don't know if this is something that is generally negotiable on my end as a plan sponsor, or if the carriers determine them without regard.

Thank you.

It's been almost 11 years since I worked for a broker, but I doubt that it's changed. You and the broker agree before the start of the plan year what the commissions will be, and that's what they tell the insurance companies when asking for quotes/negotiating renewals and then that % is included in the quotes the broker gets. I worked to have a good relationship with all my boss' clients and justify our existence, so while you're having a conversation with your broker, ask them what other services they can provide for their compensation. One time that I remember well, we took over an account from the competition and the commissions were so high that we included the costs of communicating with the employees because we couldn't justify such high compensation without doing more than our typical services. (Note that the broker canNOT return any monies to you -- it's illegal. For the account that I just mentioned, the insurance companies wouldn't reduce the rates midyear that they were charging the client mid, so we agreed with the client that since the premiums weren't changing, the commissions wouldn't either, but we'd do more for them than their other broker had done and more than we did for any of our other clients.)

Which is all a long-winded way of telling you that the broker works for you and the commissions are negotiable, so communicate with your broker and if they don't make it easy or you don't think they're earning their compensation, shop around for one who does.

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Guest Benefits Broker CO

It may also depend on the size of the group, especially fully insured plans for groups under 50. Here in Colorado, the carriers have a set per employee commission that does not change with premium increases or decreases, especially for medical.

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It may also depend on the size of the group, especially fully insured plans for groups under 50. Here in Colorado, the carriers have a set per employee commission that does not change with premium increases or decreases, especially for medical.

Oops, I'd forgotten about the small group market. I guess the advice if the commissions are not negotiable is for oriecat to have an honest discussion with the broker about what they can and should be doing to earn their compensation if oriecat thinks that the broker isn't doing enough. Brokers don't like to lose business . . . THAT I'm sure hasn't changed.

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  • 4 weeks later...
Guest dsw713

We have negotiated a flat rate fee w/our broker due to the fact that once the renewal process is complete, I don't use them for the balance of the year until next renewal.

This upcoming year we will not be using a broker at all and go direct to the carrier. There are only 4 or 5 options available due to the provider network in our area. I complete the ERAFS anyway. In the State of Ohio, you do not need a broker to secure insurance for your group. I checked this with the Ohio Dept. of Insurance.

We are a mid-size company of 95 employees, and have single medical, dental, and life ins. plans.

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Guest sniffles

Along the same lines concerning brokers - what services do your brokers offer for the money you are paying them??

Ours gets the quotes and renewal each year and answers any questions/problems we may have during the year, but months can go by with no contact.

Thank you!

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