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💰 Override commission is a supplemental commission paid by an insurer or MGA to an intermediary — typically a wholesale broker, general agent, or managing entity — on top of the base commission earned by the producing agent or broker. In the insurance distribution chain, override commissions compensate the supervising or aggregating entity for the infrastructure, compliance oversight, marketing support, and volume it brings to the relationship. The override is usually expressed as a percentage of written premium and is negotiated as part of the agency or binding authority agreement.

🔄 The mechanics are straightforward: when a retail agent places a policy through a wholesale intermediary, the insurer pays a total commission that gets split. The producing agent receives the base or "street-level" commission, while the wholesaler or MGA retains the override as its margin. Override levels vary significantly by line of business, volume tier, and the complexity of services provided — an MGA handling underwriting, policy administration, and claims on behalf of the carrier will command a higher override than a simple pass-through aggregator. Some arrangements also include profit-sharing or contingent commission layers that supplement the override if loss ratios stay below agreed thresholds.

📊 Override commissions are a critical element in the economics of delegated-authority models and multi-tier distribution structures. For carriers, the override must be calibrated so that total acquisition costs — base commission plus override plus any contingent payments — leave sufficient margin for underwriting profit. For intermediaries, overrides represent the primary revenue stream that funds operations and technology investment. Transparency around overrides has come under growing regulatory scrutiny, as conflicts of interest can arise when intermediaries steer business toward carriers offering the richest overrides rather than the best coverage for policyholders.

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