How Are Benefit Brokers Paid?
A common question we get asked is, “How are Benefits Brokers paid?
Benefit Strategies has been helping employers with benefits management services for over three decades and this question is more common than you might think. Call 1-780-437-5070 to speak with one of our Benefit Brokers today.
Our potential clients are often curious at how we get compensated for researching, recommending, and implementing a workplace benefits plan for employees. There are two basic pricing models that can be followed:
- Commissions Based Compensation
- Fee Based Compensation
Commissions Based Benefits Brokers
The majority of benefits brokers in Edmonton (and Alberta) are commissions based. This means they are paid a small percentage of the premiums paid to the insurer. This is usually built right into your benefits premiums. Commissions can vary from flat to graded rates depending on the insurance company.
- A flat rate commissions based benefits broker simply receives a percentage that does not vary with usage or time of use.
- A graded rate commission varies by dollar amount, for example:
12.5% for the first $5,000
9% for the next $69,000
7.2% for anything beyond $75,000
Fee Based Benefits Brokers
Fees based benefit plans are typically used for larger client accounts where an hourly fee for brokerage services is more appropriate. Any fees based plan is approved in writing prior to any charges. Sometimes Commissions and Fees Based pricing are used together.
Other Ways Benefit Brokers Are Paid
Contingency Income – A criteria based fee structure is what we call contingency income. Many benefits brokers will have this type of contingency income arrangement with any insurer that qualifies them for payment once certain criteria are met. This is normally calculated on an annual basis.
It can be hard to pinpoint how much your specific policy may help your broker earn. In general, contingency income payments depend more on the overall performance of the broker and their ability to keep their clients happy, rather than selling one specific employee benefits plan.
Supplemental Commissions – These are becoming more common and are starting to replace contingent commissions in some instances. Supplemental commissions are “fixed payments” established annually, based on historic performance. In the employee benefits industry, benefits brokers refer to these as “Guaranteed Supplemental Commissions” or GSCs.
From time to time, employee benefits brokers can also receive alternative compensation and benefits from insurance companies in the form of promotional events, products, training, and so on.
Our Edmonton Benefits Broker – Worth Every Penny
A good benefits broker will truly add value to your employee benefits plan.
At Benefit Strategies Inc., and at other trusted Alberta brokerage firms, you can expect your benefits broker to help with:
- Presenting your workplace benefits plan to various insurance providers
- Comparing the Pros and Cons of various employee benefits plans
- Setting up the chosen benefits plan
- Negotiating employee benefits plan’s renewal
Above and beyond services that we offer may include customizing communication for your staff (and raising awareness for the employee benefits plan), help with cost containment, and compare your benefits plan against other employers in your industry.
You can also complete our quick Contact Form through our website to get in touch with us.
Contact our Employee Benefits Plan Brokers
If you have more questions about how our benefits brokers are paid or wish more information about employee benefit plans call Benefit Strategies at 1-780-437-5070 or us an Email.
