Insurance is an essential part of risk management, providing protection and peace of mind to individuals and businesses alike. However, finding the right insurance policy can be a complex and time-consuming process, which is where insurance brokers come in. In Finland, insurance broker services operate differently than in many other markets around the world. Let’s take a closer look at how much insurance broker services cost in Finland.

Fee-Only Services

One key difference between the Finnish insurance market and others is that insurance broker services are typically fee-only, and invoiced directly to the client. This means that there is no commission-based system in place, and brokers are not incentivized to push particular insurance policies. Instead, they are paid a fee for their services, which is agreed upon upfront and detailed in the broker’s contract with the client.

One Client, One Insured

Another unique aspect of the Finnish insurance market is that insurance brokers are only allowed to have one client, and by law, that client is only the insured. This differs from most other markets around the world, where brokers can work with multiple clients and receive commissions from insurance companies. In Finland, the broker’s role is to act as an advocate for the insured, providing expert advice and guidance to help them find the right insurance policy.

15% Fee Based on Premium

In Finland, brokers are typically remunerated with a 15% fee based on the insurance premium. This fee includes the broker’s services, which may include contractual advice, risk management advice, regular inspection of premises, and general advice to top management. The fee is typically paid by the insured, and is agreed upon upfront as part of the broker’s contract.

Brokers Discount

In Finland, insurers still have a difference between gross premium (including distribution) and net premium (excluding distribution cost). This difference is called a brokers discount, and it’s usually around 15% of the premium. The discount is deducted from the gross premium and results in a net premium that is lower than the cost of insurance obtained through direct distribution. For example, an exporting company in the technical devices industry might have an insurance cost of 11,500 EUR with direct distribution costs. However, with a broker, the cost to the insurer might be 10,000 EUR, plus a broker fee of 1,500 EUR, resulting in a total cost of 11,500 EUR. This means that using a broker is cost neutral compared to dealing with an insurer as a direct client. The difference is that the broker serves his client only there is never a conflict of interest. The broker is providing a range of services and advice to help them find the right insurance policy for their needs from all available insurers.

In conclusion, insurance broker services in Finland are typically fee-only, with brokers acting as advocates for the insured and providing a range of expert advice and services. The 15% fee is based on the insurance premium and includes services such as contractual advice, risk management advice, and regular inspections of premises. Additionally, Finnish insurers offer a brokers discount, resulting in a net premium that is lower than the cost of insurance obtained through direct distribution.