Managing insurance commissions is already complex, but commission splits take that complexity to another level.
Everybody wants to make sure that they are getting their piece of the pie, and with varying rates across agents, splitting commissions between multiple agents, and maintaining accurate records along the way, it can be difficult to ensure each person’s share is correct.
Below, we’ll walk through how insurance commission splits work, common commission split calculations, and some of Core’s automation tools that you can rely on to get you through it.
How do Insurance Commission Splits Work?
Commission splits are a part of every single commission payment in insurance.
First and foremost, commissions are split between the writing agent and the agency that they work for. The agency will have contracts negotiated with each carrier that allow them to sell policies from each carrier. As an employee of the agency, the writing agent is able to sell those carrier policies, but would not be able to without the agreement between the agency and the carrier. Because of this, agencies collect a portion of each sale made by all agents on their team.
Once payment is received from each carrier for the policies sold within a given time period, the agency will then distribute a portion to the agents responsible for closing the deals.
This type of commission split is usually straightforward and is determined on a percentage-based cut.
Example:
A $1,000 commission is split 60/40 between the agency and the producing agent.
- Agent: $600
- Agency: $400
However, commissions can be split even further between fellow agents or managers, which can make the commission split calculations complicated. Below, we’ll walk through other common splits for insurance commissions and examples of what the calculations might look like.
Other Common Insurance Commission Splits
- Hierarchical Commission Splits
With larger agencies that have a multi-level organizational structure, in addition to the split between the agency and the agent, there will also be a cut divvied out to the managing agent. These are often referred to as “hierarchical overrides,” as the commissions get paid up the chain of command.
Example Split Breakdown:
- Writing agent: 50%
- Managing agent override: 10%
- Agency: 40%
Example Calculation:
- Premium: $12,000
- Commission rate from carrier: 12%
- Total commission: $1,440
How to Split it:
- Writing agent: 50% = $720
- Managing agent override: 10% = $144
- Agency: 40% = $576
- Residual / Renewal Commission Splits
Oftentimes, insurance agencies will have a different split agreement in place for policy renewals vs. new policy contracts, with new policy contracts yielding a higher commission split for the agent.
Example Split Breakdown:
- New business: Agent 70%, Agency 30%
- Renewals: Agent 40%, Agency 60%
Example Calculation for Renewal Commissions:
- Premium: $2,400
- Commission rate from carrier: 8%
- Total commission: $192
How to Split it:
- Writing agent: 40% = $76.80
- Agency: 60% = $115.20
- Role-Based Splits
How an organization chooses to split their commissions may also depend on who is interacting with their customers. Big insurance companies may have designated sales teams, “writing agents,” who broker the deal, and then account managers or “service agents” who manage customer accounts. In these scenarios, the writing agent is responsible for the sale of the policy; however, the servicing agent is responsible for ongoing management of the account after the sale. Therefore, the commission is split between the agency as well as between each role.
With role-based commission splits, the writing agent will take the biggest portion of the split, but the servicing agent will still receive a cut of the sale for their role in supporting the client post-sale.
Example Split:
- Writing agent: 40%
- Servicing agent: 20%
- Agency: 40%
Example Calculation:
- Premium: $5,000
- Commission rate from carrier: 10%
- Total commission: $500
How to Split it:
- Agency: 40% = $200
- Writing agent: 40% = $200
- Servicing agent: 20% = $100
Automating Insurance Commission Splits with Core
Seeing example calculations spelled out – like above – may make it seem like it’s simple or straightforward to calculate commission splits on insurance policies, but that could not be further from reality. There are many complicating variables that turn these seemingly simple commission split formulas into a convoluted mess.
Here’s how Core can simplify and automate commission splits:
Consolidating Carrier Statement Data
When every carrier delivers data differently, split calculations become harder. Some carriers will email you statements, some may require you to log in to download your statements, and some may even send paper statements in the mail.
However your carrier statements arrive at your agency, Core is able to automate the crucial first step of converting and consolidating the data from your carriers, so you are starting your commission split calculations with accurate data.
Assigning Rates and Splits Appropriately
Core’s rules engine lets you define the exact requirements for every rate and split. For example, if an agent earns 70% commission on new referrals but only 40% on renewals, Core automatically applies the correct rate based on the data you load into the system. All you need to do is import the data—Core handles the calculations, assignments, and adjustments automatically.
The system also allows you to assign agents to carrier statement rows automatically, pre-populating fields with the appropriate commission data without having to manually apply rates.
Commission Reporting
With Core’s library of off-the-shelf commission reports, you never have to worry about manually creating commission reports in spreadsheets ever again. You can run Core’s pre-built “Commission Splits by Sales Accounts” report to show the breakdown for each employee. Users also have the ability to customize reports to match your agency’s processes if you have specific report outlines that you prefer to follow.
Additionally, Core keeps up-to-date records of every agent rate-split change, and you can easily run reports to show how an agent’s commission rate has changed over time.
Transparent Online Portal for Sales Reps
It is beneficial to everyone when insurance agents have transparency to track their commission pay. Commission splits are complex, and your agents will want a clear breakdown of how their sales are distributed. When you have a clear reporting system for your agents, it helps build trust and reduces any potential back-and-forth or disputes regarding their pay.
Core’s online portal allows agents to see exactly what they earned, what rates were used, and how their splits were calculated, so they can feel confident that their commission pay is accurate and fair.
Take the Next Step Toward Automated Commissions
Calculating insurance commission splits can be a complex and time-consuming task. With varying rates for new business versus renewals, multiple agents each getting their cut from a sale, and frequent changes to rate structures, manually tracking and calculating payouts opens the door to errors and inaccurate payments.
Automating commission splits eliminates these challenges by applying consistent rules, maintaining a history of rate changes, and generating detailed reports in seconds—and Core is here to automate it all, so you don’t spend hours every payroll buried under spreadsheets.
Schedule a demo to see how Core transforms your commission processes with end-to-end automation.