Broker or direct

On most intermediated group insurance the broker is paid by the insurer, out of commission that forms part of the premium the employer pays. The employer does not receive a separate invoice for it.

Two qualifications, and they matter. This is the common arrangement rather than a universal one: some products are written on a fee basis, some insurers price differently through different channels, and a scheme can be set up either way by agreement. And what an intermediary is paid on your particular arrangement is a question with a specific answer, which you are entitled to ask and which any broker should tell you plainly.

If you want that answer about us before speaking to us, ask for it in the first call. It is a reasonable opening question and it is one of the few that separates one broker from another.

Some of this is genuinely better direct, depending on the organisation.

• You deal with one insurer. Fewer people in the chain, and for a single product with a stable workforce that can be simpler.
• You do the administration. Joiners, leavers, member queries, the annual data return and the renewal negotiation all sit with whoever owns benefits internally.
• You see one market. An insurer quotes its own product. Comparing it against others is work somebody has to do.
• You handle claims support yourself. When somebody is unwell and something is disputed, the person chasing it is you.

Worth knowing before treating it as a cost decision.

• The intermediary cost, usually. If commission is built into the pricing, going direct does not automatically remove it. Whether it does on your product is a question for the insurer, and it is worth asking in exactly those words.
• The policy terms. The cover, the exclusions and the underwriting basis are the insurer's, not the intermediary's.
• Your duties as an employer. Communicating the benefit, and keeping a record of what you looked at, stay with you either way. That is the duty of care rather than an insurance question.
• Take-up. A benefit nobody knows about is unused whoever arranged it, which is the subject of why employees do not use their benefits.

The same questions work on an insurer and on a broker, which is what makes them useful.

• Is commission included in this premium, and how much is it?
• If we went direct, would the price change, and by how much?
• Who handles a claim when a member is stuck, and what does that look like in practice?
• Who deals with joiners, leavers and the annual data return?
• What happens at renewal, and what will you show me about the wider market?
• What is your regulatory status, and what is your firm reference number?

It cannot tell you what your cover costs, what your intermediary is paid on it, or whether you would pay less either way. Those are specific to your scheme, your insurer and your product.

It also cannot tell you that a broker is the right answer for you. For a small, single-product arrangement with somebody internal who enjoys the administration, direct can be perfectly sensible. The point of the page is that the decision is about who does the work, and it is often made as though it were about price.