Insurance Premium Breakdown
What are all the line items on my insurance quotation?
It is important to understand what all the different charges are on an insurance quotation. Below is a breakdown of the key insurance line items on most insurance quotes. Some more complex insurance quotes may list additional costs associated with additional services that are delivered.
The base premium is the initial part of your insurance quote. Base premiums typically are the largest cost on your insurance quotation.
Base premiums are determined by the insurance company and are associated with the levels of risk that they calculate in providing the level of insurance coverage to you. Base premiums may change over time as the costs insurers face to provide coverage fluctuates.
Base premiums are calculated with respect to the type of business you operate, the industry, field or occupation and your business’s size and location.
Charges or Levies
Sometimes governments impose levies on insurance premiums to provide funds after catastrophic events. Some recent examples include the emergency services levy and the fire services levy. Levies may be imposed for a period of time and can be removed by Governments from time to time.
Some insurance companies and underwriters will provide insurance brokerages who have sold their insurance policies to a client, a commission.
Insurance Broker commissions are based on a percentage of a client's insurance policy base premium.
Broker commissions can vary between different insurers and may be between 0-25% of the base premium.
Broker Fees are optional or discretionary fees that brokers may choose to charge clients based on the complexity of the work they are undertaking for clients.
Broker fees need to be clearly and separately identified on any insurance quotes that you are provided.
Broker fees are not contingent on the base premium levels and are calculated independently by the broker.
Stampy Duty is a Government imposed charge that is calculated based on the base premium. In addition, sometimes any additional levies or charges may have stamp duty applied to them.
Stamp Duty is set by the Government and your broker is required to pass on the stamp duty to the relevant associated Government body. Your insurance broker does not keep any of the stamp duty that is listed on your insurance premium.
GST - Goods and Services Tax
Some parts of your insurance premium costs have GST applied.
Typically, GST is applied to your base premium and to any broker fee that has been applied by your insurance broker. The GST rate is currently 10%.
You can ask your broker to explain these terms further
Insurance brokers should be happy to explain these various costs and what they mean in more detail if you ask. If they are not willing to explain these terms and costs to you, then it might be time to find a new insurance broker.