Glossary · Insurance agency commissions
Agency agreement
An agency agreement, also called a producer agreement or agency-company agreement, is the written contract between a carrier and an independent agency that sets what the agency may sell and bind, how premium is handled, how and when commission is paid or changed, who owns the expirations and what happens when the relationship ends.
What it means
The appointment is what the carrier files with the state; the agency agreement is the contract behind it. The Big “I” Office of the General Counsel publishes reviews of individual carriers’ agreements, and they read like a list of the clauses worth negotiating. On commission, its review of a Utica National agreement says: “The Agent may wish to seek longer notice for commission changes, such as 90 days, and require that a reduction in commission will occur no more than once per year.”
What it means for commission: the agreement, together with the commission schedule it points to, is the only document that says what you should have been paid. It decides whether commission is earned on written or collected premium, how chargebacks work, whether you may deduct commission on agency-billed policies, and how long renewals are paid after a termination. When a statement and your expectation disagree, the agreement settles it. This page is general information, not legal advice; your agreement and your state’s law decide.
How it shows on a commission statement
The agreement never appears on a statement, but its effects do: a new rate after a notified commission change, a renewal paid at a run-off rate, a line that stops after the carrier terminates the agency. The check starts from the version of the agreement and schedule in force on the policy’s effective date, not the one in force today.
In reconciliation, and what Lapidar does
Lapidar does not read agency agreements. It uses the rates you enter as a commission schedule per carrier, line and new or renewal business, and checks each statement line against your book premium times that rate. Keeping the schedule in step with your current agreement is what makes those checks meaningful.
Example
| Clause | What it says | What to check on statements |
|---|---|---|
| Commission | Schedule EX-SCH-3, 90 days’ notice of changes | Old rate until the notice period ends |
| Agency bill | Agency deducts commission when remitting | Account current nets commission correctly |
| Termination | Renewals paid for 12 months at the same rate | Run-off renewals still arriving, unreduced |
| Chargebacks | Pro rata on returned premium | Chargeback = rate × return premium |
Common mistakes to check
- Checking statements against a rate from memory instead of the schedule the agreement points to.
- Missing a notice of commission change, then treating the new rate as an error, or the old rate as correct.
- Not keeping a signed copy of every version, so a run-off dispute has nothing to stand on.
- Assuming one carrier’s termination and renewal terms apply to another carrier.
Questions
Is an agency agreement the same as an appointment?
No. The appointment is the carrier’s authorization, filed with the state in many states. The agency agreement is the contract that sets commission, billing, authority and termination terms.
Can a carrier change my commission under the agreement?
Usually yes, with the notice the agreement requires. Big “I” contract reviews suggest asking for longer notice, such as 90 days, and limiting reductions to once a year.
What should an agency negotiate in a producer agreement?
Notice periods for commission changes and termination, ownership of expirations, run-off renewal terms, chargeback rules and any production requirements. The Big “I” publishes reviews of specific carriers’ agreements.
Where do I find my commission rates?
In the commission schedule attached to or referenced by the agreement, which may be updated more often than the agreement itself.
Sources
- Big “I” Office of the General Counsel, Utica National Insurance Group Agency Agreement (January 2022), contract review, October 2021 (PDF). Retrieved October 14, 2026.
- Big “I” Office of the General Counsel, Hanover Agency Agreement Review, November 2021 (PDF). Retrieved October 14, 2026.
Lapidar is commission reconciliation software for independent insurance agencies, in its founding pilot. Related: carrier appointment.