Commission is capped at 12,5% on motor and 20% elsewhere. When a South African brokerage may charge a fee on top, how to agree it, and what to keep on file.
"So what do you actually make on my policy?" It arrives on a Saturday morning, in a thread that until then was about a windscreen claim. It is a fair question, and the brokerages that answer it well tend to be the ones that have already worked out, in writing, what they earn, what it is for, and where a fee begins.
The rules on that are narrower than most advisers assume. Commission is capped by regulation; a fee on top is possible but conditional; and the conditions are about evidence as much as about percentages.
The regulations made under the Short-term Insurance Act cap what an insurer may pay an intermediary: up to 12,5% of the premium on a motor policy and up to 20% on any other short-term policy. The cap is per policy, not per intermediary — where more than one party renders services in relation to the same policy, the total commission cannot exceed the maximum. That is why a binder holder, an underwriting manager and an independent broker in the same chain have to split a fixed pool rather than each drawing a full commission.
Commission pays for the intermediary service: presenting the product, giving advice, placing the risk, servicing it during the year, handling the renewal and assisting at claim stage. Anything a client would reasonably expect from having a broker is inside that envelope. This is the practical answer to the Saturday-morning question, and it is a stronger position than it sounds — being paid by the insurer for work the client would otherwise do alone is exactly the argument in our comparison of the broker and direct channels in South Africa.
Since the repeal of section 8(5) of the Short-term Insurance Act and the tightening that followed, an insurer may only deduct a broker fee from the premium and pay it over where the arrangement meets the conditions in Rule 12 of the short-term Policyholder Protection Rules, which governs arrangements with intermediaries and other persons. In substance, four tests have to be satisfied at once.
| Test | What it means in practice | What proves it |
|---|---|---|
| Agreed in writing by the policyholder | The client knows the amount, the basis and what it buys, before it is charged | A signed fee agreement, dated before the first deduction |
| For a specific, actual service | Something the brokerage in fact delivered, not a general "service fee" | The deliverable itself — a report, a survey, a schedule of work done |
| Not an intermediary service | Not placing, servicing, renewing or ordinary claims assistance, which commission already pays for | A written description of the service and why it sits outside the mandate |
| Reasonable and commensurate | Proportionate to the work, not to the size of the premium | An internal basis of calculation you can show consistently across clients |
The unwritten fifth test is no duplication: you cannot be paid twice for the same work, once by the insurer as commission and once by the client as a fee. If you also place life, funeral or credit life business, do not read any of this across — remuneration on the long-term side sits under different rules, and the FSCA has kept intermediary remuneration under review for years.
There is no published list of fee-able services, which is precisely why brokerages get this wrong in both directions — some charge for work commission already covers, others leave real advisory work unpaid. The test is the rule, applied service by service.
| Work | Normally covered by commission | Possible basis for a fee |
|---|---|---|
| Obtaining quotes, placing and renewing the policy | Yes | No |
| Ordinary claims assistance and follow-up | Yes | No |
| Mid-term amendments, certificates, schedules | Yes | No |
| A standalone risk survey or risk-improvement report the client keeps | No | Possibly, if scoped and delivered |
| Fleet or asset data work well beyond the policy schedule | No | Possibly, if scoped and delivered |
| Structured training for the client's staff | No | Possibly, if scoped and delivered |
| Advice on a risk the client chooses not to insure | No commission is earned | Possibly, if agreed in advance |
Personal-lines fees are not prohibited, but they are much harder to justify: the honest question is what the client received beyond having their policy placed and looked after. If the answer takes more than a sentence, the fee is probably an intermediary service by another name.
Disclosure comes first and comes early. The FAIS General Code of Conduct requires the client to be told, before they decide, what you will earn and what any fee will be — not discovered later on a debit-order line. In practice, the fee conversation belongs in the same sequence as the rest of your new client onboarding: mandate, disclosures, remuneration, then cover.
WhatsApp is very good at part of that job and cannot do the rest. It carries the explanation in plain language, delivers the fee agreement as a PDF, and produces a timestamped, attributable record of the client saying they have read it and agree. What it does not produce is a signed document: insurers that facilitate fee deductions typically want their own signed consent on file, and if a fee is ever disputed you want to show the client a document they can be shown to have received and accepted, not only a chat line reading "ok". Use the thread as the covering conversation and the evidence that the client understood, and keep the signed agreement as the agreement. ORIS is a WhatsApp CRM, not a signature tool: it will hold the conversation in a shared inbox, keep it against the client record and export it, but the mandate itself stays a document your practice manages.
One more habit worth building: review fee agreements annually. A fee that was reasonable when it covered a fleet survey stops being reasonable when the survey stops happening, and a standing deduction nobody has looked at in four years is the kind of thing that turns a routine visit into a finding.
If the FSCA, an insurer's compliance team or the National Financial Ombud asks about a fee, the question is always the same: what did the client get, and did they agree to pay for it? Five things answer it.
None of this is exotic. It is the same discipline as a record of advice, applied to your own remuneration, and it converts an awkward Saturday-morning question into a two-line answer you are happy to send.
Yes, but only for a service that is not an intermediary service and not already remunerated by that commission, agreed in writing by the policyholder, and reasonable in relation to the work. The overlap is where firms come unstuck: a "policy administration fee" on top of full commission is very difficult to defend because administering the policy is what the commission is for.
The rules do not set a rand or percentage cap the way the commission regulations do. The control is the reasonableness test: the fee must be commensurate with the service provided. In practice that means you should be able to show a costing basis — time, scope, deliverable — rather than a percentage of premium, which tends to look like commission wearing a different hat.
A chat message is written, dated and attributable, and it is useful evidence that the client understood and accepted. It is not a substitute for the signed fee agreement most insurers require before they will facilitate a deduction, and it is weaker if the client never received a document setting out the fee. Send the document, get it signed, and keep the thread as the conversation around it.
The maximum applies to the policy, not to each party, so where a binder holder or underwriting manager also earns on the same policy, the total is shared within the cap. Find out early in the placement who else is being remunerated, because it changes what the arrangement is worth to you and what you may need to discuss with the client.
No. The commission caps and the Policyholder Protection Rules are South African instruments. Namibia, Botswana, Zambia, Kenya, Nigeria and Ghana each set their own remuneration and disclosure requirements through their own regulators, and several of them cap commission by class as well. Check the local rule before applying a South African fee model in another market.
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