I recently had an interesting question from a Big I agent who was taking advantage of the free 30 minute consultation that all Big I members get every quarter under the Free Legal Service Program that I operate for the Big I. The question concerned why a broker that the agent sometimes used to find a market for one of his customers could quote a higher cost for obtaining a particular insurance coverage than the insurance company would quote if approached directly by an agent. The difference was a fee added by the broker for its services.
After reviewing the applicable sections of the Georgia Insurance Code, it appeared to me that the Code did not impose a limit on what an insurance broker could charge for its services, where the broker was acting purely as an intermediary between the insurance company and another insurance agency or agent. If the broker (i) has no contact with the customer in connection with obtaining the insurance coverage, (ii) does not assist in servicing the coverage, and (iii) does not share the commission paid by the insurance company for that coverage with the insurance agency or agent, the disclosure requirements of the Code and the limitations on what a customer can be charged for obtaining insurance coverage do not appear to apply.
For those agencies and agents that are looking to increase their revenue, acting purely as a broker for other agencies or agents where possible may be one way to do so. The fact that many insurance companies will not allow their agents to broker business is a problem, but where that restriction does not exist, the opportunity to increase your revenue does. However, that opportunity does come with some risk as I am not aware of any definitive ruling on this subject from either the Insurance Commissioner or the Georgia courts.