Insurance basics · Brokers
What does an insurance broker actually do for you?
Insurance broker meaning, in plain terms: a licensed adviser who works out what cover you need, finds a policy for you, explains the conditions that could stop a claim, and helps when you claim. Here’s what the law requires of a broker, how brokers are paid, and how to check the one you’re using.
Insurance broker meaning: an adviser who works for you
An insurance broker is a licensed intermediary who stands between you and the insurer, advising you on what to buy and arranging the policy, rather than selling one company’s products as its employee. In South Africa that work is regulated under the Financial Advisory and Intermediary Services (FAIS) Act, so every broker must be an authorised financial services provider (FSP), or a representative working under one, and must be licensed for the type of product it advises on.
The FAIS Act splits the work into two parts. Advice is recommending a product. An intermediary service is the hands-on work after that, which the FAIS Ombud says includes “receiving, submitting or processing the claims of a client against a product supplier” (FAIS Ombud). A broker who does both is involved from the first quote to the last claim. For how short-term cover differs from life cover, see our guide to short-term vs long-term insurance.
That definition is easier to picture as the steps a broker takes with you.
What a broker does, from quote to claim
A broker’s job runs through the whole life of a policy: understanding your risks, recommending and placing cover, keeping it accurate when your life changes, and helping you claim. Each step carries a legal duty.
1. Understands what you need to protect
Before recommending anything, a broker gathers information about your home, car, business and existing cover, so that the advice fits your circumstances. Getting values right at this stage matters most; our guide to underinsurance and the average clause shows what happens when they’re wrong.
2. Tells you who they are and who they deal with
FSCA guidance for intermediaries lists the disclosures a client should get: the FSP, the adviser’s role and mandate, the service provided and the product suppliers involved (FSCA). Insurers must also disclose any commission payable to the intermediary (Policyholder Protection Rules (2017)).
3. Recommends cover and explains the catches
Section 7(1)(c)(vii) of the General Code requires “concise details of any special terms or conditions, exclusions of liability, waiting periods, loadings, penalties, excesses, restrictions or circumstances in which benefits will not be provided.” This is where tracker requirements, security warranties and excesses should be spelled out.
4. Keeps a record of the advice
Section 9(1) of the Code requires a provider to keep a record of the advice that must “reflect the basis on which the advice was given”. If anything is disputed later, that record is the main evidence of what you were told.
5. Keeps your cover current
When an insurer changes a condition, or your circumstances change, the broker passes the change on and adjusts the policy. As the rulings below show, this is where broker failures most often cost clients money.
6. Helps you claim
A broker can submit and follow up your claim. Where the insurer has mandated an independent intermediary to manage claims, a claim the broker receives counts as received by the insurer. Our step-by-step car insurance claim guide shows where the broker fits in.
Not everyone who sells insurance does all six of these for you, which is the real difference between a broker, an agent and buying direct.
Insurance broker vs agent vs buying direct
The difference comes down to whom the person selling you cover works for and how many insurers they can approach. An independent broker can place your cover with the insurers it holds agreements with. A tied agent or insurer representative sells one company’s products. Buying direct means dealing with the insurer’s own staff, usually by phone or online.
| Independent broker | Tied agent | Direct insurer | |
|---|---|---|---|
| Who they work for | Their own FSP, on your behalf | One insurer | The insurer |
| Insurers they can approach | Those on the broker’s panel | One | One |
| Advice on your needs | Yes, under the FAIS Code | Yes, on that insurer’s products | Depends on the channel; some sell without advice |
| Help at claim time | Can submit and follow up your claim | Varies | You deal with the insurer’s claims team |
| How they’re paid | Commission from the insurer, capped by regulation, plus any fee you agree to in writing | By the insurer | Built into the premium |
Whichever route you choose, one question comes up every time: who is paying the person helping you?
How do insurance brokers get paid?
Most short-term brokers are paid commission by the insurer out of the premium you already pay, within legal caps. The regulations under the Short-term Insurance Act limit commission to 12.5% of the premium on a motor policy and 20% on most other policies (Regulations under the Short-term Insurance Act, reg 5.3), and the insurer must disclose the commission to you.
Some brokers also charge a separate broker fee for work beyond what the commission pays for. Since section 8(5) of the Short-term Insurance Act was repealed in 2018, an insurer that collects such a fee for a broker is governed by rule 12.4.1 of the Policyholder Protection Rules: the fee must be reasonable, “explicitly agreed to in writing by the policyholder”, and for a specific service that isn’t already covered by commission (FAnews (2025)). If a fee appears on your debit order, you should be able to point to where you agreed to it. Commission is also one of the components of your premium, as our guide to how car insurance premiums are calculated explains.
Knowing how a broker is paid tells you what to expect. The FAIS Ombud’s rulings show what happens when a broker doesn’t deliver.
When a broker gets it wrong: three FAIS Ombud rulings
When a broker fails in its duties and the client loses out, the FAIS Ombud can order the broker to pay the loss. In 2024/25, complaints about advice on short-term insurance made up 12.36% of the complaints the FAIS Ombud opened, 418 in total, of which 105 concerned motor insurance (Moonstone on the FAIS Ombud annual report (2025)). Three recent determinations, all published on the FAIS Ombud’s determinations page, follow the same pattern:
- A new tracker condition no one passed on (FAIS-64423-23/24 GP 2, May 2025). An insurer added a tracking-device requirement, the client’s vehicle was stolen in an armed robbery, and the claim was rejected because no tracker was fitted. The broker couldn’t prove it had told the client about the requirement. The Ombud found its actions did “not display the skill, care and diligence required” and ordered it to pay R786,300, the vehicle’s retail value, plus interest.
- A policy change sent to the wrong email address (FAIS-53191-23/24 GP 2, February 2025). Notice of a new tracker requirement went to an email address that wasn’t the policyholder’s, with no follow-up call. After the vehicle was stolen and the claim rejected, the broker was held liable for R681,250.
- A satellite tracker condition never explained (December 2023). The Ombud relied on section 7(1)(c)(vii) of the Code, found no evidence that the client had been told about the condition, and ordered the broker to pay R301,466.
In each case the client did nothing wrong except rely on a broker who didn’t pass on a condition that decided the claim. That’s why it’s worth checking who you’re dealing with before you rely on them. If an insurer has already turned down your claim, our guide to rejected claims and the National Financial Ombud sets out the route for complaints against insurers.
How to check a broker, and the questions to ask
Ask for the broker’s FSP number, then look it up on the FSCA’s register of authorised providers, where you can “type in the FSP number or do a partial search on the FSP name” (FSCA). Check that the name matches and that the FSP is authorised for short-term insurance. Then use the questions below; your ticks are saved in this browser.
Best Care’s own licence details are on our FAIS disclosure page, and our page on why use a broker explains how we work with insurers. For background on Best Care itself, see about us.
Insurance broker FAQs
General answers about short-term insurance brokers in South Africa.
What is an insurance broker?
An insurance broker is a licensed intermediary, authorised as a financial services provider under the FAIS Act, who advises you on cover and arranges it with an insurer on your behalf. A short-term broker deals with cover such as car, home and business insurance.
What does an insurance broker do?
A broker gathers information about what you need to protect, recommends and places cover, explains the special terms and exclusions, keeps a record of the advice, updates your policy when things change and can submit and follow up your claims.
How do insurance brokers get paid in South Africa?
Most short-term brokers are paid commission by the insurer out of your premium. Regulations cap it at 12.5% of the premium on motor policies and 20% on most other policies. Some brokers also charge a separate fee, which needs your explicit written agreement if the insurer collects it.
Is it cheaper to use a broker or go direct?
It depends on the risk and the insurers involved, so there’s no general answer. A broker’s commission is part of the premium within regulated caps, and a broker can compare the insurers on its panel. A direct insurer prices only its own products.
What is the difference between a broker and an agent?
An independent broker can place your cover with the insurers it holds agreements with. A tied agent or insurer representative sells one insurer’s products.
How do I check if a broker is registered?
Ask for the broker’s FSP number and search for it on the FSCA’s register of authorised financial services providers. Check that the name matches and that the FSP is authorised for short-term insurance.
Can my broker help with a claim?
Yes. Under the FAIS Act, receiving, submitting or processing a client’s claim is an intermediary service. Where the insurer has mandated the broker to manage claims, a claim the broker receives counts as received by the insurer.
What can I do if my broker gave me bad advice?
Complain to the broker first in writing. If that doesn’t resolve it, you can take the complaint to the FAIS Ombud, which can order a broker to compensate a client for losses caused by a breach of its duties.
Want a broker to review your cover?
Best Care can review your current home, car or business cover, explain the conditions that matter, and compare options with the insurers we work with. Cover remains subject to each insurer’s underwriting and the final policy documents.
This article is general education, not personal financial or legal advice. Legal requirements are summarised from the FAIS General Code of Conduct as quoted in FAIS Ombud determinations, the regulations under the Short-term Insurance Act and the Policyholder Protection Rules (Short-term Insurance), as checked in October 2026. Best Care Insurance Brokers CC, registration 1992/100995/23, Authorised FSP 8754. See the FAIS disclosure.