Glossary
Base Commission
The standard percentage of premium a carrier pays an agency on a policy, before any contingent, override, or bonus arrangements.
Base commission is the predictable part of agency revenue: a stated percentage applied to premium, payable as the premium is collected or earned depending on the contract. Rates vary widely by line, from low single digits on some commercial business to twenty percent or more on certain personal lines.
Because base commission is contractually determined, it is fully verifiable. Expected commission can be computed from the premium and the rate schedule, and any difference from what the carrier paid is a variance worth investigating.
See also
- Commission Rate Schedule — The agreed table of commission percentages a carrier pays an agency, typically varying by line of business, new versus r…
- Contingent Commission — Additional compensation paid by a carrier based on the profitability, growth, or volume of the business an agency placed…
- Override Commission — Extra commission paid above the base rate, often to a general agent, aggregator, or agency principal on business produce…