How Insurance Referral Arrangements Work in Australia

Finance and mortgage brokers can earn from insurance referrals. Here's how referral arrangements work, who they suit and what referral partners need to know.

If clients regularly ask you about insurance and it falls outside what you do, a referral arrangement gives you a structured way to help them. Here is how they work, who they suit and what is expected of referral partners.

What is an insurance referral arrangement?

An insurance referral arrangement is a formal agreement between your business and a licensed insurance broker. Under the arrangement, you introduce clients with insurance needs to the broker. The broker handles all advice, placement and ongoing service. You receive a fee for the introduction.

What you do not do is give insurance advice. You make the introduction and the broker does the rest.

Can a mortgage broker or finance broker refer insurance clients?

Yes. Mortgage brokers, finance brokers and other professionals can introduce clients to a licensed insurance broker. The key distinction is between making an introduction and giving advice.

Making an introduction means letting a client know you can connect them with a broker. Giving advice means recommending a specific product, suggesting which insurer to use or commenting on whether a particular policy suits their situation. A referral arrangement formalises the introduction and keeps that distinction clear.

Who are insurance referral arrangements suited to?

Referral arrangements work well for any professional who regularly encounters clients with insurance needs that fall outside their core scope.

The most common referrers are:

Mortgage brokers and lenders who settle property transactions and want to ensure borrowers have appropriate building or landlord cover in place
Finance brokers who arrange equipment or commercial loans where the financed asset needs to be insured
Accountants whose business clients ask about insurance as part of broader financial discussions
Property managers and real estate agents who deal with landlords, tenants and buyers on a regular basis
Conveyancers and settlement agents who manage property transactions where cover needs to be arranged at settlement

If you currently field insurance questions from clients and either deflect them or attempt to answer them yourself, a referral arrangement provides a cleaner path.

How does the referral process work in practice?

Once the arrangement is in place, the process is straightforward:

You identify a client who has an insurance need, whether at loan settlement, during a property transaction or in an ongoing relationship
You let the client know you can introduce them to an insurance broker and get their consent to share their details
You pass the client’s contact information to Cipher
Cipher contacts the client, provides licensed insurance advice and arranges the appropriate cover
Cipher manages the relationship through renewals, policy changes and claims
You receive a referral fee in line with the agreed terms of the arrangement

Your client gets proper licensed advice instead of a vague answer or a referral to Google. You stay within your professional scope and earn a fee for an introduction you would likely be making anyway.

What is the difference between referring and advising?

The key distinction in any referral arrangement is between making an introduction and giving advice.

Making an introduction means letting a client know you can connect them with an insurance broker and passing their details with consent. Giving advice means commenting on which type of cover they need, which insurer to use or whether a specific policy suits their situation. That is the broker’s role.

ASIC has taken action against professionals who have given financial product advice outside their licensing scope. In one case, a Queensland mortgage broker received an eight-year industry ban for recommending clients purchase property through their superannuation, a financial service she was not licensed to provide.¹

Under a referral arrangement with Cipher, all advice, product recommendations and ongoing service are handled by Cipher. Your role is the introduction.

What does a referral partner need to do?

The main practical requirement is disclosure. Before or at the time of making a referral, the referral partner lets the client know that a referral arrangement is in place and that a fee may be received for the introduction.²

The disclosure is a short plain statement. Cipher provides standard wording when the arrangement is set up.

Beyond that, the referral partner’s role is to make the introduction and step back. All advice, policy recommendations and ongoing service are Cipher’s responsibility.

Is an insurance referral arrangement right for your business?

If clients ask you about insurance and you currently either deflect the question or take a guess at an answer, a referral arrangement addresses that situation.

It connects clients who have an insurance need with someone qualified to help, generates a structured fee for the introduction and ensures your client leaves with a clear next step rather than an incomplete answer.

Key Takeaways

An insurance referral arrangement is a formal agreement where you introduce clients to a licensed broker and receive a fee for the introduction
Mortgage brokers, finance brokers, accountants, property managers and conveyancers are the most common referrers
Making a referral means introducing a client to a broker. Giving advice means recommending products or commenting on suitability and that is the broker’s role
Before or at the time of making a referral, disclose to the client that an arrangement is in place and that a fee may be received
Cipher manages the full client relationship from that point: advice, placement, renewals and claims

If you are interested in becoming a referral partner, get in touch.

The information in this article is general in nature and does not constitute legal, financial or compliance advice. Please speak with a qualified adviser about your specific circumstances.