How much does an insurance broker make in a year – revealed

There are few professions in the UK that have minimal educational and professional requirements yet have the potential to provide individuals with a significant income. One such profession is that of an insurance broker. Fortunately, becoming an insurance broker in the UK does not require a university degree nor having special certifications.  

Another appealing feature of the insurance broker career is that since you work as an intermediary between clients and insurance companies, it’s a part of their job to help people. Appealing as this sounds, the biggest benefit of this profession is how much it pays.   

In this article, Insurance Business delves into the potential earnings of an insurance broker in the United Kingdom. So, what is the average insurance broker salary in the UK? How much do insurance brokers make per policy sold? How much does an insurance broker make per year? We’ll provide insights into these and more in this guide on insurance brokers and their earnings.
    

How much insurance brokers make in a year: salary range from entry-level to experienced professionals   

According to the National Careers Service, the average salary for an insurance broker can depend on factors like the individual broker’s level of experience and expertise. The average salary for a starting broker is £20,000, while the salary for a senior insurance broker can average £65,000. According to Reed, the average salary for a broker in the UK in general is at £41,784.  

This is only one of the many factors that can influence how much a UK insurance broker makes in a year. Other factors include their location, work experience, other qualifications, and level of education.    

Depending on their role or position in an insurance brokerage, here’s an estimate of how much an insurance broker’s annual salary is in the UK:    

Factors influencing insurance broker compensation 

There are different factors that can impact an insurance broker’s salary, including:  

• Broker's experience – brokers who are new to the industry tend to have lower salaries, while senior broker salaries can be in the £40,000 to £100,000 range.
    
• Location – insurance broker salaries for those who operate in London are generally higher than those working in other insurance markets. This is mainly because the cost of living there is significantly higher. There is also a greater concentration of insurance firms and their clients in this city.
    
• Types of insurance or clients handled – brokers that deal in commercial lines often earn higher commissions than those who deal in personal lines. Also, brokers who cater to business clients are more likely to earn more than those who service individuals.

Top-paying cities for insurance brokers in the UK 

How much an insurance broker makes in a year can depend on where they reside or which market they service. Here are some other locations in the UK where insurance brokers can earn a substantial salary:  

Commission rates for different types of insurance 

For independent insurance brokers whose income relies largely on commissions, it’s important to know and specialise in the more profitable types of insurance. Brokers typically receive between 30% and 49% in commissions from insurers but they can sometimes receive as much as 62%. The commission rate can vary depending on the volume, quality, and cost of doing business.   

Here's a list of the insurance types or sectors that can earn you higher commissions:    

1. Life insurance 

At present, this remains the most lucrative among all other types of insurance. Commissions on life insurance policies can net brokers as much as 20% to 80% of their client’s first year premium. A commission of this size is mainly due to the complexity of the policy and its long-term nature.    

Life insurance policies in the UK also typically involve a lot of client engagement and explanation. Brokers may also receive additional commissions as these policies are renewed, but these commissions are much lower, falling in the 2% to 10% range.
   

2. Motor insurance 

Commissions for coverage on your client’s motor vehicle can range from 7.5% to 12.5%. While this seems an insignificant amount, most successful auto insurance brokers go by volume – as all motorists in the UK need car insurance.
    

3. Property insurance 

Commissions on property coverage fall in the range of 10% to 15%. To maximise earnings, insurance brokers can find clients that need insurance for large properties or commercial spaces which can grant as much as 20%.  
  

4. Liability insurance 

Depending on the liability covered and its complexity, liability insurance can give as much as 10% to 20% in commissions.
    

How do insurance brokers in the UK get compensated? 

There are different ways for insurance brokers in the UK to earn money. In most cases, they make their earnings off commissions they receive from the policies they sell. However, an insurance professional like a claims broker may receive a monthly salary, apart from earning commissions.
    

Employment models 

How much an insurance broker makes in a year largely depends on their employment and pay structure. Here are a couple of ways that UK insurance brokers can be employed and compensated:  

• Brokerage firms – In these insurance companies, brokers are given a fixed salary along with insurance broker commissions from the policies they sell. This compensation scheme is lucrative, since brokers have a stable income combined with a performance-based incentive paid as a percentage of insurance sales.
    
• Independent brokers – These brokers earn primarily from commissions, but some may charge clients fees. This type of broker typically does not receive a salary, unless they have a specific arrangement with their clients.  

Insurance broker responsibilities 

The role of an insurance broker entails performing several tasks and taking on certain responsibilities. Once you obtain your licence and get into the business of broking these responsibilities can include:  

• Gathering information from clients and assessing their insurance needs
   
• Creating a risk profile of each client
   
• Researching insurance policies to find the most suitable ones for your client
   
• Negotiating rates to provide insurance coverage to clients at the best terms
   
• Arranging coverage for clients and submit their details to insurers
   
• Interpreting complex policy terms and conditions to clients, making sure they understand them before agreeing to purchase insurance policies
   
• Managing the clients’ insurance coverage by assisting with policy renewals, amendments and mid-term adjustments
    
• Anticipating your client’s needs and making recommendations for policy adjustments as the need arises
   
• Advising clients on whether they need to make claims and when to make such claims
   
• Arranging special types of insurance if your client has complex circumstances
   
• Delivering exceptional customer service by listening to and addressing your clients’ concerns
   
• Assisting in risk management
   
• Keeping accurate and detailed records of each client
    
• Developing and maintaining good relationships with underwriters, surveyors, photographers, engineers, and other professionals who can be involved in the claims process
   
• Staying apace with insurance industry trends and updates
   
• Remaining updated with clients’ industries
   
• Collecting clients’ insurance premiums and process claims
   
• Winning new clients and acquiring accounts from competitors
     

Educational requirements 

What is most appealing about insurance careers like that of an insurance agent or insurance broker? The simple fact that neither profession requires a formal education. To become an insurance broker in the UK, all you need is to have GCSEs at grades 9 to 4 (A* to C), which includes English and Mathematics. An aspiring insurance broker should also have A-levels or their equivalent for entry-level posts.
     

Do I need a university degree? 

University degrees are not required to become an insurance broker in the UK, however, obtaining one can be advantageous. Should you decide to earn a degree before applying for your licence at the Financial Conduct Authority (FCA), choose one that can equip you with the foundational knowledge and skills for insurance. These courses can include:  

• Accounting
   
• Business management
   
• Commercial law
   
• Communications
   
• Economics
   
• Mathematics
   
• Psychology
    
• Sociology 
   

While having a degree in these subjects may be particularly useful, many employers are generally more interested in your skills, personal attributes, and your potential contribution to their company.  
 

Skills needed by insurance brokers 

It’s not merely due to the volume of clients and the type of insurance policies that an insurance broker offers that can earn them large commissions. Oftentimes, the earnings of an insurance broker in a firm or from their independent practice depends on their skills. Here are the critical skills that insurance brokers need that can help them earn substantial commissions, as well as find new clients and retain them:    

1. Communication skills  

This means having excellent written and verbal communication skills. Brokers need this skill to translate the jargon that’s prevalent in the insurance industry and interpret it in simple language for their clients.  
  

2. Customer service 

This is a critical skill, since it involves listening to client’s concerns and issues, then addressing them promptly. Excellent customer service is what can set you apart from other full-time brokers and ensure that you maintain good client relationships. Providing good customer service can even attract new clients via referrals from satisfied clients.  
  

3. Numerical skills 

Numeracy is a very important skill for insurance brokers to have. You’ll have to do a lot of calculations and ensure that you get the figures right, as even the smallest mistakes can make a large difference in your client’s premiums.  
  

4. Attention to details 

The meticulous insurance broker is the broker that reads and knows the fine print and even the minutest details of an insurance policy. This is also a useful skill when assessing a client’s needs.  
  

5. Organisational skills 

A significant portion of your work as an insurance broker involves meeting existing and potential clients. These meetings are crucial to your business and must be done apart from all the paperwork. Organising your daily and weekly meetings, while filing the necessary documents is a critical skill, especially when you run a solo operation and don’t have an assistant or secretary to set your schedule.  
  

6. IT skills and computer literacy 

A lot of the marketing for businesses like insurance broking is successfully implemented online. You need to know how to leverage today’s internet tools like social media. To make your operations more efficient and competitive, it helps to know how to leverage insurtech, like applications that automate claims processing.    

You will also need a website; while you don’t need to build one yourself, it helps to know how your website should function to make it easier for clients to find you via SEO.  
  

7. Trustworthiness 

Being trustworthy does not only extend to fully disclosing what clients need to know about their insurance plans and handling their money with integrity. Your clients need to know that their circumstances, like with regards to their health, for example, are kept in strict confidence.    

There are several factors that can influence how much an insurance broker in the UK can make in a year, although even the average broker’s salary is slightly higher than the national average. For those who want to earn a lot as a broker, working in London is the best strategy to obtain a significantly higher income.    

However, being in the right locale does not guarantee that you can earn a lot of money as an insurance broker – this is a fulfilling but challenging profession, where only the most experienced, highly-skilled and hardworking brokers earn the largest salaries and commissions.    

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