Health Insurance

Average Insurance Broker Commission 2023-2024 - Health Insurance, Medicare, and More

Mira Research Team
Mira Research Team15 Aug 2023


  1. Insurance brokers earn commissions, usually a percentage of the premium paid by the consumer, from insurance companies when a policy is sold. Commissions vary significantly depending on the type of insurance, with health insurance brokers earning between 4% to 6% and life insurance brokers earning between 7% to 15% on average.
  2. Commercial health insurance commissions differ based on the market (individual, small group, large group) and geographical location, with average individual market commissions across the U.S. at $170.76 per member per year.
  3. Medicare product brokers earn between $600 to $700 for each Medicare Advantage plan sold, $300 to $400 for each yearly renewal, and up to $100 for each Medicare Part D sold with lower amounts for renewals.
  4. Brokers can negotiate better commissions by building strong relationships with insurers, demonstrating their value, leveraging volume, seeking continuous education and training, and considering multi-year contracts. To grow their client base, brokers can leverage client referrals, enhance their online presence, collaborate with other businesses, improve customer service, and offer a wide range of products.

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I. Understanding Insurance Broker Commissions

Insurance broker commissions are essentially the monetary compensation received by insurance brokers for their services. According to Investopedia, they are typically a percentage of the insurance premium that the consumer pays. This means that if a consumer pays an annual premium of $1,000 for their insurance policy, and the broker's commission is 10%, the broker would earn $100 from that transaction. This commission serves as an incentive for brokers to find the best possible insurance options for their clients, as higher premiums usually result in higher commissions.

The way these commissions work is relatively straightforward. Forbes explains that when a consumer buys a policy through a broker, that broker receives a commission from the insurance company. This commission is usually paid annually for as long as the policy remains active. However, it's important to note that not all commissions are created equal. The amount a broker can earn from a single transaction can vary greatly depending on several factors, including the type of insurance policy, the size of the premium, and the terms of the broker's agreement with the insurance company.

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II. Average Commissions for Different Types of Insurance Products

The commission rates vary significantly among different types of insurance. Health insurance brokers, for example, typically earn between 5% and 10% of the premium. A research study published in Insurance Journal indicates that this comparatively low rate can be linked to the complex regulations surrounding health insurance and the fact that it's often sold in bundles rather than individually.

Insurance TypeAverage Commission
Health insurance4% to 6%
Homeowners insurance5% to 8%
Auto insurance3% to 5%
Life insurance7% to 15%
Commercial insurance10% to 25%

On the other hand, life insurance brokers can earn significantly higher commissions - often between 80% and 100% of first-year premiums. This rate generally reduces thereafter to about 4-6% from second year onwards. The high upfront commission is justified by the fact that life insurance policies often require substantial effort to sell and set up.

Property and casualty insurance brokers generally receive between 10% and 15% commission on premiums. Auto insurance brokers also fall within this range. These percentages reflect both the risk associated with these types of policies and the level of service required from brokers.

In conclusion, commission rates vary widely among different types of insurance brokers, influenced by factors such as regulatory requirements, risk levels, and service demands. However, it is essential to remember that while commissions constitute an integral part of how brokers earn their living, their primary role is to serve clients' best interests by providing them with suitable coverage options.

III. Average Commission for Different Types of Commercial Health Insurance

The Kaiser Family Foundation's 2020 study provides a comprehensive look at how broker fees fluctuate across various markets and geographical locations in the United States. The data reports on three primary markets: Individual, Small Group, and Large Group, with broker fees measured on a per member per month (PMPM) basis and a per member per year (PMPY) basis. Nationwide, the study found that the average Individual Market Broker Fees were $14.23 PMPM and $170.76 PMPY. For Small Group Markets, these figures were higher at $22.54 PMPM and $270.48 PMPY. Large Group Markets had lower fees of $9.97 PMPM and $119.64 PMPY.

However, these averages varied significantly by state. For example, in Alabama, the Individual Market Broker Fees were significantly lower than the national average at $1.37 PMPM and $16.44 PMPY. By contrast, Delaware had notably higher Individual Market Broker Fees at $23.43 PMPM and $281.16 PMPY.

Annual commission by locationIndividual PlanSmall GroupLarge Group
United States$170.76$270.48$119.64
District of Columbia$45.00$358.56$131.64
New Hampshire$235.08$560.88$294.48
New Jersey$123.96$361.80$134.88
New Mexico$140.40$284.88$124.68
New York$93.00$250.68$148.44
North Carolina$113.40$82.80$55.92
North Dakota$301.56$265.44$101.16
Rhode Island$164.40$241.08$146.76
South Carolina$146.28$206.28$78.24
South Dakota$100.08$210.48$144.96
West Virginia$30.72$123.00$22.56
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IV. Average Commission for Medicare Products

On average, Medicare Advantage brokers make between $600-$700 for each MA plan sold, and $300-$400 for yearly renewals. Brokers can earn up to $100 for each Medicare Part D sold and $50 for every renewal. Medicare Supplement can pay out $322 for a new enrollee and $166 for every renewal. 

Maximum Broker Compensation for 2024

Annual Commission per Enrollee InitialRenewal
Medicare Advantage National$611$306
CT, PA, DC$689$345
CA, NJ$762$381
Puerto Rico, U.S. Virgin Islands$418$209
MedicarePart DNational$100$50

V. How To Negotiate Better Commission As A Broker?

Negotiating better commission rates can be a crucial part of your success as an insurance broker. While the process can be challenging, there are several strategies you can employ to improve your chances of securing better rates:

1. Build Strong Relationships: Building strong relationships with insurers can be instrumental in securing better commission rates. If insurers see you as a valuable partner who brings in consistent business, they may be more willing to negotiate on commissions.

2. Demonstrate Value: Show the insurer that you're worth the higher commission rate. Highlight your track record of sales, client retention, and customer service. If you can prove that you're bringing in profitable business, insurers may be more likely to agree to a higher commission.

3. Be Prepared to Walk Away: If an insurer is not willing to negotiate on commission rates, be prepared to walk away and take your business elsewhere. This should be a last resort, but it's crucial to show that you value your work and are not afraid to seek better opportunities.

4. Leverage Volume: If you’re bringing substantial business to the insurer, use this as leverage in negotiations. Insurers are often more willing to offer higher commission rates for brokers who can deliver a significant volume of business.

5. Seek Ongoing Education and Training: By improving your skills and knowledge through ongoing education and training, you can make yourself more valuable to insurers. Certified brokers who understand the latest trends and regulations in the insurance industry may command higher commission rates.

6. Consider Multi-Year Contracts: If you're willing to commit to an insurer for several years, they may be more willing to offer better commissions. A multi-year contract provides stability for the insurer, which could justify a higher commission rate.

Remember that negotiation is a two-way process - it's about finding an agreement that benefits both parties. Be respectful and professional in your communications, and always be prepared with evidence to support your case for a higher commission rate.

IV. 5 Strategies To Grow Client Volume

Increasing client volume is a key objective for most insurance brokers. Here are some top strategies to help achieve this:

1. Leverage Client Referrals: Satisfied clients are one of the best sources for new business. Establish a referral program that incentivizes your current clients to refer their network to you. This could be through discounts or other rewards.

2. Enhance Your Online Presence: In today's digital world, having a strong online presence is essential. Build a user-friendly website and maintain active profiles on relevant social media platforms to reach a larger audience.

3. Collaborate with Other Businesses: Partner with businesses or professionals who serve the same target market. For example, real estate agents, mortgage brokers, or financial planners could provide referrals to potential clients in need of insurance services.

4. Improve Customer Service: Providing excellent customer service can set you apart from competitors. A personalized approach not only retains existing clients but also attracts new ones through positive word-of-mouth.

5. Offer a Wide Range of Products: By offering a variety of insurance products, you can cater to a broader range of customer needs. This versatility can attract more clients and also provide cross-selling opportunities..

Mira Research Team

The Mira Research team conducts original data and medical research on the most applicable topics of today and translates them into easy-to-understand articles to educate the public. Each of our articles is carefully reviewed and curated with interviews and opinions from medical experts, public health officials, and experienced administrators. The team has educational backgrounds from New York University, the University of Virginia, more.