https://www.insurerbrain.com/w/index.php?action=history&feed=atom&title=Definition%3ACommission 2026-06-13T08:38:30Z Revision history for this page on the wiki MediaWiki 1.43.8 https://www.insurerbrain.com/w/index.php?title=Definition:Commission&diff=6593&oldid=prev 2026-03-09T16:22:22Z

<p>Bot: Creating new article from JSON</p> <p><b>New page</b></p><div>💵 &#039;&#039;&#039;Commission&#039;&#039;&#039; is the compensation paid to an [[Definition:Insurance agent | insurance agent]], [[Definition:Insurance broker | broker]], or other [[Definition:Intermediary | intermediary]] for placing or servicing an [[Definition:Insurance | insurance]] [[Definition:Policy | policy]]. It is typically expressed as a percentage of the [[Definition:Premium | premium]] and is either deducted by the intermediary before remitting premium to the [[Definition:Insurance carrier | carrier]] or paid by the carrier after the policy is bound. Commission structures vary widely by [[Definition:Class of business | class of business]], distribution channel, and market conditions, and they represent one of the largest components of an insurer&#039;s [[Definition:Acquisition cost | acquisition costs]].<br /> <br /> 🔄 Several variations exist. A [[Definition:Flat commission | flat commission]] pays a fixed percentage regardless of performance, while a [[Definition:Contingent commission | contingent commission]] — sometimes called a [[Definition:Profit-sharing commission | profit-sharing commission]] — rewards the intermediary when the [[Definition:Book of business | book of business]] meets profitability or growth targets. [[Definition:Overriding commission | Overriding commissions]] may be layered on top of base rates to compensate a [[Definition:Managing general agent (MGA) | managing general agent]] or wholesale [[Definition:Insurance broker | broker]] that oversees a network of producing agents. In [[Definition:Reinsurance | reinsurance]], the [[Definition:Ceding commission | ceding commission]] paid by the [[Definition:Reinsurer | reinsurer]] to the [[Definition:Ceding company | ceding company]] offsets the originating insurer&#039;s acquisition and administrative expenses.<br /> <br /> ⚖️ How commissions are structured shapes behavior across the distribution chain. Generous upfront commissions incentivize volume but can strain an insurer&#039;s [[Definition:Combined ratio | combined ratio]] if [[Definition:Loss ratio | loss experience]] does not keep pace. Contingent arrangements better align the intermediary&#039;s interests with long-term profitability, though they have attracted regulatory scrutiny over potential conflicts of interest. For carriers, striking the right commission balance is both a financial calculation and a strategic one — the terms must be attractive enough to win quality distribution partners while preserving margins that sustain the business.<br /> <br /> &#039;&#039;&#039;Related concepts&#039;&#039;&#039;<br /> {{Div col|colwidth=20em}}<br /> * [[Definition:Contingent commission]]<br /> * [[Definition:Ceding commission]]<br /> * [[Definition:Overriding commission]]<br /> * [[Definition:Acquisition cost]]<br /> * [[Definition:Insurance broker]]<br /> * [[Definition:Expense ratio]]<br /> {{Div col end}}</div>

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