Brokers rake in commission for decades

An investigation by The Times has found insurance brokers are raking in commission for decades on policies they have sold, but their clients know nothing about it.

The paper said: “Millions of people are unknowingly paying commission for private medical cover and other insurance.


“Britain’s biggest insurers, such as Aviva and Legal & General, pay a fortune every year to brokers, financial advisers and comparison websites.”

The investigation found the commissions are paid from the premiums paid by customers, but ‘are not routinely disclosed’.

Paid for decades

The paper added: “An insurer is not obliged to reveal them if a customer asks. The commission may be paid every year for decades.”

It gave an example of pensioners Rob and Jennifer Cobley who discovered they had paid out £2,208 over eight years to a broker selling policies by Aviva, Britain’s largest insurer.

The initial commission was £628 in 2013 but was followed by annual payments of £228, £258, £166, £187, £203, £253 and finally £285 in 2020.

They had no idea they were being charged on their medical policy.

Many types

Commission is paid by insurers on many types of insurance from medical to life, critical illness or income protection policies. Commission on private health insurance can be as much as 33%.

The Times claimed that insurers regard commissions as an alternative to paying for advertising.


Aviva told them: “We have priced our product in a way that is the same regardless of the channel used by the customer at any point in time.”

Legal and General said: “The vast majority of the commission is paid to the adviser up front; the customer can nonetheless request we do not pay future commission at any point.

This has no impact on the customer’s premium.”

No reduction

Zurich said: “Premiums will stay the same throughout the life of the policy. They won’t reduce if the customer determines they don’t want to deal with a particular distributor.”

A spokesman from the Financial Conduct Authority (FCA) commented: “Firms are required to design products that meet consumer needs, and should consider whether insurance products, including the cost of any distribution arrangements, offer value.

Intermediaries should ensure that fees or commissions do not conflict with their duty to act in their customer’s best interests.”


Former pensions minister Baroness Altmann said: “It is astonishing that this kind of remuneration is still permitted in financial services.

Wrongheaded regulation has facilitated salesmen selling products that may never be suitable for the customer.”

Commission ion the sale of investment products was banned in 2013.

Brokers agreed to take an upfront fee – a move designed to ensure brokers sold products suitable for the client and not the one that had the biggest commission attached.