Guide
What is an insurance broker, and what do they actually do?
An insurance broker acts for you, not the insurer. They work out what cover your business needs, take it to the market, place the policy and sit on your side when you claim. Here is how brokers are licensed and paid, what the Financial Services Guide tells you, and when a broker is worth it over buying direct.
- Acts for you, not the insurer
- Licensed under an AFS licence or as an authorised representative
- Paid by commission, a fee or both, and must tell you
An insurance broker arranges insurance on your behalf
An insurance broker is a licensed intermediary who acts for the person buying insurance. The Insurance Brokers Code of Practice, written by the National Insurance Brokers Association, puts it plainly: a broker acts for the client, and their job is to help you understand your options, make an informed choice and navigate the insurance system. An insurer’s own sales team acts for the insurer.
In practice that means four things: assessing the risks in your business, advising which covers and limits fit, placing the policy with an insurer, often after taking it to several, and helping when you need to claim.
What a broker does, step by step
| Stage | What the broker does |
|---|---|
| Fact find | Asks what you do, where, with whom, your turnover, staff, contracts and claims history. The answers decide which covers apply and which insurers will quote. |
| Advice | Recommends covers and limits. Advice that takes your personal circumstances into account is personal advice and comes with a Statement of Advice. General advice comes with the general advice warning. |
| Placement | Takes your risk to one or more insurers, negotiates terms and binds the policy once you accept. Each cover is a separate policy, even when one broker arranges all of them. |
| Documents | Sends the policy schedule, the PDS and a certificate of currency, and keeps a record of what was disclosed. |
| Renewal | Reviews the cover before it renews. Under the 2027 Code, subscribing brokers must give at least 28 days’ notice before a policy renews. |
| Claims | Lodges the claim, deals with the insurer and the assessor, and pushes back when a decision looks wrong. |
How brokers are licensed
Anyone advising on or arranging general insurance in Australia needs an Australian Financial Services (AFS) licence from ASIC, or must be an authorised representative of a licensee. The licence number and the licensee’s name belong on the broker’s Financial Services Guide and website, and you can check both on ASIC’s professional registers.
The Insurance Brokers Code of Practice sits above the law for brokers that subscribe to it. The 2022 Code runs until the 2027 Code starts on 1 January 2027, and an independent committee, the Insurance Brokers Code Compliance Committee, monitors subscribers.
How brokers are paid, and what they must tell you
Brokers are paid in one of three ways. The Financial Services Guide must set out which applies to you.
| How | What it means for you |
|---|---|
| Commission from the insurer | A percentage of the premium, built into the price. The broker must tell you it exists, and from 1 January 2027 subscribing brokers must disclose the dollar amount on request. |
| A broker fee | Charged to you for the work of arranging cover, shown separately on the invoice. |
| Both | Commission plus a fee. Both must appear in the Financial Services Guide and on your documents before you buy. |
How Compare Insure and our broker partner are paid is disclosed in the footer of every page.
What the Financial Services Guide tells you
Every licensee must give you a Financial Services Guide (FSG) before, or as soon as practicable after, providing a financial service. Read these parts:
- Who the licensee is, and whether the broker is an authorised representative of someone else
- The services they’re authorised to provide, and for which products
- How they’re paid: commission, fees or both, and any other benefits
- Whether they act for you or for an insurer on particular products
- How to complain, and that you can take an unresolved complaint to AFCA
If a broker can’t produce an FSG, walk away.
Broker, direct, or comparison site?
| Route | Best when |
|---|---|
| Direct from an insurer | You know exactly what you need, the risk is simple and the insurer’s own product fits. You get no advice, and the insurer’s staff act for the insurer. |
| Comparison site | You want to see several insurers side by side for a standard cover such as public liability. Check whether the site is licensed, which insurers it compares and how it’s paid. |
| Broker | The risk is unusual, a contract demands specific wording, you hold several covers, or you want someone on your side at claim time. Construction, transport, professional risks and workers compensation in the privately underwritten states usually belong here. |
Compare Insure combines the last two: a licensed broker reviews every request, compares our insurer panel and emails the quotes. We don’t compare every insurer in the market.
What a broker can’t do
A good broker will tell you this up front.
- Guarantee a price.Insurers set premiums. A broker negotiates and compares, but can’t promise the result.
- Cover what you didn’t disclose.Your duty to take reasonable care not to misrepresent still applies. The broker can only place what you tell them.
- Replace reading the PDS.The product disclosure statement and target market determination set out what the policy does. Read them before you accept.
- Make a claim succeed.They can present it properly and challenge a poor decision, including through AFCA.
Compare quotes through a licensed broker
Insurance broker questions
What is the difference between an insurance broker and an insurance agent?
A broker acts for you. An agent acts for the insurer and sells that insurer’s products. Both must be licensed or authorised, and the Financial Services Guide must say which one you’re dealing with.
Do insurance brokers charge a fee?
Some do. Brokers are paid by commission from the insurer, by a fee charged to you, or both. The arrangement must be disclosed in the Financial Services Guide and on your documents before you buy.
Is it cheaper to use an insurance broker?
Not always, and that’s the wrong test. A broker can reach insurers and wordings you can’t buy direct, and can negotiate. The value is the right cover and the support at claim time. Compare the cover and the total cost, including any broker fee.
How do I check an insurance broker is licensed?
Search ASIC’s professional registers for the AFS licensee or the authorised representative. The licence number should match the one on the broker’s Financial Services Guide.
What happens if I have a complaint about my broker?
Complain to the broker first; they must have an internal process. If it isn’t resolved, the Australian Financial Complaints Authority (AFCA) handles complaints about brokers and insurers free of charge.
Is Compare Insure an insurance broker?
Quotes requested through Compare Insure are arranged by a licensed broker, who reviews your details and compares our insurer panel. Our licensing and how we’re paid are set out in the footer of every page.
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