Finder’s Fee

What Does Finder’s Fee Mean?

A finder’s fee is a payment made to an individual or entity for successfully identifying or facilitating a business deal. In the insurance industry, a finder’s fee may be paid to individuals who help connect insurance companies with potential policyholders or, conversely, assist policyholders in finding suitable insurance providers.

Insuranceopedia Explains Finder’s Fee

Insurance companies gain significantly from acquiring suitable policyholders, so they are often willing to pay finder’s fees to agents and brokers who connect them with qualified applicants and facilitate policy sign-ups. For instance, if someone introduces a mortgage insurance company to ten recent mortgage borrowers, the company may compensate this intermediary with a finder’s fee for helping them discover these potential clients. (That said, borrowers may not actually need mortgage life insurance at all, so the value of these referrals depends on the product.) The same kind of referral arrangement is common across life, auto, and homeowners insurance, which is one reason why rates and service can differ so much between the top life insurance companies.