Glossary
Chargeback
A reversal of a previously paid commission, typically because a policy was canceled, downgraded, or the premium was returned to the client.
Chargebacks happen when commission was paid on a policy but the underlying premium was later refunded or reduced. Common causes: client cancellations within the free-look period, mid-term downgrades, audit adjustments on workers' comp policies, and bad debt write-offs.
Carriers process chargebacks by netting them against future commission payments, which is why a single carrier statement can contain a mix of new commissions and prior-period reversals. Without good reconciliation, chargebacks are easy to miss — and they directly affect producer compensation.
Tracking chargebacks correctly is critical for producer commission accuracy. If a producer was paid on the original sale, they typically owe back their share of the chargeback.
See also
- Commission Statement — A document from a carrier showing the commissions earned by an agency on policies sold, including premium amounts, commi…
- Producer Split — The percentage of an agency's commission that is shared with the producer who wrote the policy. Splits often vary by lin…