What is the primary way surplus lines brokers earn their income?

Surplus lines brokers primarily earn their income through commissions on the premiums of the policies they place. This commission structure is a significant aspect of their business model, as surplus lines brokers operate in a specialized market that covers risks not typically addressed by standard insurers. When they facilitate the placement of insurance policies with non-admitted carriers—those not licensed in the client’s state—they receive a percentage of the premium as compensation for their services.

This commission-based income aligns with the broader insurance industry practices, where agents and brokers earn a percentage of the premiums they generate through policy sales. It incentivizes brokers to find the best possible coverage options for their clients while also ensuring they are compensated for their expertise in navigating complex insurance needs that fall outside conventional offerings.

The other options provided do not represent the primary income means for surplus lines brokers. Licensing fees and consultation rates are not standard revenue streams in their operations, and while service fees for handling claims might occur in certain instances, they are not the main source of income.