Which is generally fee-based rather than a fixed commission rate?

Which is generally fee-based rather than a fixed commission rate?

• A. National broker
• B. Independent agent
• C. Exclusive agent
• D. Captive agent

Answer: (A)

Compensation models for insurance intermediaries differ: some rely on commissions tied to the policy premium, while others charge separate fees for services. A national broker typically charges clients directly for advisory and risk-management services—such as program design, market placement, and ongoing service—with fees that are independent of policy premiums. This fee-based approach is common in large, full-service brokerages because they provide strategic guidance and ongoing support beyond just selling a policy. In contrast, agents tied to a single insurer (captive or exclusive agents) are compensated by fixed commissions paid by the insurer on the policies sold, and independent agents usually earn commissions from carriers based on premiums for the policies they place. While fees can occur in some cases, the default and general practice for these roles is commission-based, not fee-based. So the generally fee-based option is the national broker.

Compensation models for insurance intermediaries differ: some rely on commissions tied to the policy premium, while others charge separate fees for services. A national broker typically charges clients directly for advisory and risk-management services—such as program design, market placement, and ongoing service—with fees that are independent of policy premiums. This fee-based approach is common in large, full-service brokerages because they provide strategic guidance and ongoing support beyond just selling a policy.

In contrast, agents tied to a single insurer (captive or exclusive agents) are compensated by fixed commissions paid by the insurer on the policies sold, and independent agents usually earn commissions from carriers based on premiums for the policies they place. While fees can occur in some cases, the default and general practice for these roles is commission-based, not fee-based.

So the generally fee-based option is the national broker.