Choosing an Insurance Broker in Melbourne: How They Are Paid, and When One Earns It

By Eleni Papadakis

The renewal letter arrives, you open it at the kitchen table, and the number has gone up again. If you have felt that little drop in your stomach, you are far from alone. For plenty of Melbourne households, insurance has become one of the harder bills to absorb, and it is natural to wonder whether someone else could find you a better deal. That someone is often an insurance broker. A good broker can save you time, find cover that is hard to get, and stand beside you if a claim goes wrong. For some people, though, a broker is an extra layer they do not really need. This guide is here to help you work out which camp you are in, and how to choose a broker well if you decide to use one. It is general information, not financial advice.

What a broker actually does

It helps to start with what a broker is, because the word gets used loosely.

According to NIBA, the national body for insurance brokers, a broker is not tied to any one insurer. A broker’s job is to assess the risks you face, recommend the kind of cover that suits them, and then source and compare policies from the insurers available to them. Brokers also handle renewals and adjust your cover as your circumstances change. And when you need to make a claim, a broker can advocate for you with the insurer.

That last part is easy to overlook until you need it. Making a claim can be stressful, and having someone in your corner who understands the policy wording can make a real difference to how it feels.

If you do meet a broker, it helps to arrive prepared. Bring your current policy schedules and the latest renewal letters, and jot down anything that has changed since you last bought cover: a renovation, a new car, a business you have started from the spare room, valuables you have added. The broker can only assess the risks they know about, and a quiet half-hour gathering papers beforehand makes the first conversation far more useful.

There are other ways to buy insurance, of course, and each has its place:

None of these is the right choice for everyone. It mostly depends on how complicated your situation is, and how much time and energy you have for shopping around.

How brokers are paid

This is the question I would encourage you to ask first, before anything else.

A broker can be paid in a few ways. Often the broker receives a commission from the insurer, which is built into the premium you pay. Some brokers also charge you a broker fee directly. And some are paid both ways on the same policy. None of these arrangements is wrong in itself, but you deserve to know which one applies to you.

Commission is the one that can be easy to miss. Because it sits inside the premium, you may never see a separate line for it, and the broker’s help can feel as though it comes at no cost. The cost is there, built into what you pay the insurer. A broker paid by commission can still be a very good choice. Knowing how it works just means that when you compare a broker’s quote with one you found yourself, you are comparing the whole price in each case.

The document that tells you is called the Financial Services Guide, or FSG. A broker gives you an FSG to explain the services they offer and how they are paid. Please do ask for it, and read the part about remuneration. It does not need to be a long read, and it answers the question most people feel awkward asking out loud.

If the broker charges a fee, a couple of follow-up questions are worth asking. Is the fee charged once, or again at every renewal? And is any of it refunded if you cancel the policy part-way through the year? Neither question is rude, and the answers are much easier to deal with before you sign than after.

You may also have seen that how brokers disclose their pay is being debated right now. The Insurance Brokers Code of Practice, the industry’s code, is being rewritten, and a draft 2027 Code is out for consultation. According to Insurance Business Australia, in a submission reported on 12 August 2026, the Australian Financial Complaints Authority (AFCA) urged that remuneration disclosure cover all individual and small business clients. AFCA called it “the Industry’s final chance to do the right thing on disclosure”.

The draft clause, as reported, would limit that disclosure to small business clients for retail products. NIBA, for its part, says it supports disclosure to all retail clients, with a period to adjust. The final Code is expected later in 2026, and until it is settled, nobody can say for certain what it will require.

Why does this matter to a household? Because, as things stand, whether a broker tells you how much they earn on your policy may depend on the broker and on the final shape of the Code. You do not need to wait for the outcome, though. You can simply ask, and a broker who is comfortable with how they are paid will tell you.

Checking the broker

Before you hand over your policies, it is worth a few minutes to check who you are dealing with.

In Australia, insurance brokers must hold an Australian financial services (AFS) licence, or act as an authorised representative of a business that holds one. Moneysmart, the government’s money guidance service, recommends dealing only with licensed businesses. Its reasoning is reassuring: you are better protected, and you have access to free dispute resolution if something goes wrong. Moneysmart also makes the point that a licence does not mean ASIC endorses the business, so think of the licence as the first check rather than the only one.

You can check a broker’s licence, or their authorised representative status, on ASIC’s Professional Registers. It is free, and it only takes a few minutes. Make a note of the business the broker is licensed through or represents, and check that it matches the details on the FSG you were given. If the names do not line up, ask the broker to explain before you go any further.

It is also worth asking whether the firm subscribes to the Insurance Brokers Code of Practice. That tells you the broker has signed up to the industry’s standards, whatever their final form.

And if something does go wrong, it helps to know the path in advance. Complaints go to the broker’s own internal complaints process first. If that does not resolve things, you can take the complaint to AFCA, the external dispute resolution body.

When a broker earns it

So when is a broker worth it? One broker, asked that exact question, put it plainly: it is worth it if you have more complex business and personal risks to manage, but for cars, basic houses and boats, not really. That is a good place to start.

A broker tends to earn their keep in situations like these:

• Hard-to-place risks. One household described contacting insurer after insurer directly about a duplex under a body corporate, and being told every time that they would not be covered. A broker found one. Heritage or unusual homes can raise similar difficulties.
• Renovations under way. Cover during building work can be complicated, and the standard policy may not fit.
• A business run from home. Your home and contents policy may not cover business equipment or stock, and a broker can help you find out where the gaps are.
• Small business insurance. Packages that combine public liability, contents, business interruption and professional indemnity have a lot of moving parts, and getting the mix right matters.
• Claims help. If a claim is disputed, an experienced broker’s advocacy can be worth a great deal.
• Lots of policies. If you are juggling home, contents, several cars, a business and more, having one person keep it all under review can take a real weight off.

It is worth being clear about what a broker cannot do, too. A broker can recommend cover, explain your policy and argue your case at claim time, but the insurer still decides whether a claim is paid under the policy terms. A broker who promises that every claim will go through is promising something that is not theirs to give.

If you are working through your household’s bigger financial picture at the same time, such as making or updating a will, this site’s guide to choosing wills and estates help in Melbourne may help you think about the paperwork side alongside your cover.

When going direct is fine

It is perfectly okay to decide you do not need a broker. Many people manage very well on their own.

Going direct can work nicely if your situation is simple: one car, a standard home and contents policy, and a willingness to shop around. The one catch is that last part. If you go direct, you need to be actively re-quoting whenever your premium goes up, rather than letting the policy roll over. That takes a little time each year, but for a simple set of policies, it may be all you need.

If you do re-quote yourself, try to compare like with like. Have your current policy schedule beside you, and ask each insurer to quote on the same basis: the same sum insured for the building and the contents, the same excess, and the same optional extras. A lower premium that comes with a higher excess or a smaller sum insured is a different policy, and it is much easier to spot that with the old schedule in front of you. Set a reminder a few weeks before each renewal date, so that you are shopping around calmly rather than in the last few days.

You also do not have to choose one approach for everything. Some households use a broker for the complicated policy, such as the business cover or the hard-to-place home, and go direct for the simple ones, such as the car. That mix can give you help where you need it without paying for it where you do not.

If you have a car policy and something happens on the road, one of the practical questions is who chooses the repairer. This site’s guide to choosing a smash repairer in Melbourne walks through that side of a claim.

Questions to ask a broker

If you decide a broker is right for you, these questions will help you choose one you can trust. You might like to have them written down when you call.

1. How are you paid on this policy: commission, a fee, or both?
2. Which insurers did you approach for me?
3. Why are you recommending this policy over a cheaper one?
4. What will you do for me if I need to make a claim?
5. Do you subscribe to the Insurance Brokers Code of Practice?
6. What happens at renewal: will you re-quote my cover, or will it simply roll over?

A couple of these deserve a word about what a good answer sounds like. For the second question, a good broker can tell you which insurers they approached, and ideally why some were left out. For the third, the answer should be about your situation: what the recommended policy covers that the cheaper one does not, and why that matters for you. A vague “it is a better policy” tells you very little, while “it covers the home business equipment the cheaper one excludes” tells you exactly what the extra money buys.

A good broker will be glad you asked. The answers should be clear and unhurried, and if any of them feel evasive, it is fine to thank them and keep looking.

Ask how they are paid before you ask for a quote

You do not have to become an insurance expert to make a good decision here. Start by working out how complicated your situation really is. If it is simple, going direct and re-quoting each year may suit you well. If it is complex, hard to place, or tied up with a business, a broker may be worth every bit of what they earn.

If you do choose a broker, ask how they are paid and read the Financial Services Guide. Check their licence on ASIC’s Professional Registers, ask whether they follow the Code, and know that AFCA is there if a complaint cannot be resolved. The rules on disclosing broker pay are still being worked out, so for now, the simplest protection is your own question, asked at the very start.

Sources: Moneysmart, AFS licence (https://moneysmart.gov.au/glossary/afs-licence); Moneysmart, Financial Services Guide (https://moneysmart.gov.au/glossary/financial-services-guide-fsg); ASIC, Professional registers search (https://www.asic.gov.au/online-services/search-asic-registers/professional-registers-search); NIBA, What brokers do (https://niba.com.au/what-brokers-do); Insurance Business Australia, Government intervention on broker commissions moves from threat to deadline, 12 August 2026 (https://www.insurancebusinessmag.com/au/news/breaking-news/government-intervention-on-broker-commissions-moves-from-threat-to-deadline-585834.aspx)