https://www.insurerbrain.com/w/index.php?action=history&feed=atom&title=Definition%3AFlat_commission 2026-04-30T05:15:19Z Revision history for this page on the wiki MediaWiki 1.43.8 https://www.insurerbrain.com/w/index.php?title=Definition:Flat_commission&diff=6862&oldid=prev 2026-03-10T04:53:27Z

<p>Bot: Creating new article from JSON</p> <p><b>New page</b></p><div>💰 &#039;&#039;&#039;Flat commission&#039;&#039;&#039; is a fixed percentage paid to an [[Definition:Insurance broker | insurance broker]] or [[Definition:Insurance agent | agent]] for placing or servicing a policy, regardless of the policy&#039;s [[Definition:Loss ratio (L/R) | loss ratio]] or profitability outcome. Unlike [[Definition:Contingent commission | contingent commissions]] or [[Definition:Profit commission | profit commissions]], which fluctuate based on how the book of business performs, a flat commission locks in the intermediary&#039;s compensation at the point of sale. The rate is typically defined in the [[Definition:Binding authority agreement | binding authority agreement]] or agency contract and applies uniformly to every policy written under its terms.<br /> <br /> 📊 The commission is calculated as a set percentage of the [[Definition:Gross written premium (GWP) | gross written premium]] and is deducted before the net premium flows through to the [[Definition:Insurance carrier | carrier]] or [[Definition:Reinsurer | reinsurer]]. For example, if a [[Definition:Managing general agent (MGA) | managing general agent]] earns a 15% flat commission on a $100,000 commercial policy, the carrier receives $85,000 as its share of the premium. Because the rate does not change with claims experience, flat commissions simplify accounting and cash-flow projections for both the intermediary and the insurer. They are especially common in lines where loss volatility makes performance-based structures harder to calibrate, such as [[Definition:Specialty insurance | specialty]] or [[Definition:Surplus lines insurance | surplus lines]] business.<br /> <br /> 🔍 For carriers, agreeing to a flat commission means absorbing all underwriting risk without sharing it through variable compensation. This makes the structure attractive to intermediaries seeking income predictability, but it also means the insurer must rely on other levers — like [[Definition:Underwriting guidelines | underwriting guidelines]], audits, and [[Definition:Bordereaux | bordereaux]] reporting — to keep loss performance in check. In [[Definition:Delegated underwriting authority (DUA) | delegated authority]] arrangements, carriers sometimes pair a modest flat commission with a smaller [[Definition:Profit commission | profit commission]] to maintain alignment of interests, blending stability for the intermediary with an incentive to write profitable business.<br /> <br /> &#039;&#039;&#039;Related concepts&#039;&#039;&#039;<br /> {{Div col|colwidth=20em}}<br /> * [[Definition:Contingent commission]]<br /> * [[Definition:Profit commission]]<br /> * [[Definition:Gross written premium (GWP)]]<br /> * [[Definition:Managing general agent (MGA)]]<br /> * [[Definition:Binding authority agreement]]<br /> * [[Definition:Commission override]]<br /> {{Div col end}}</div>

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