Glossary · Insurance agency commissions
Audit premium
Audit premium is the premium adjustment after a carrier audits actual payroll or sales at term end. It can be additional premium or a return.
What it means
Policies rated on exposures that are only known later, typically workers’ compensation and general liability, are written on an estimate and audited after the term ends. The audit compares the estimate with the actual figures and produces an adjustment.
Under most agreements commission follows the audited premium at the policy’s rate, but some agreements treat audit premium differently; check yours. Because audits happen after expiry, the commission line can arrive months after the policy ended.
How it shows on a commission statement
An audit appears as its own transaction, often coded AUD. Additional premium produces a positive commission line; a return produces a chargeback. The positive ones are the easiest to miss, because nobody is waiting for them.
Example
| Policy | Estimated | Audited | Adjustment | Commission |
|---|---|---|---|---|
| EX-20518 | 12,000.00 | 14,500.00 | 2,500.00 | 250.00 |
| EX-20533 | 6,000.00 | 5,200.00 | −800.00 | −80.00 |
Common mistakes to check
- No commission line for an additional-premium audit.
- An audit chargeback at a different rate from the one originally paid.
- On agency bill, additional audit premium remitted to the carrier but never collected from the insured.
- Losing track of audits because the policy has already renewed or left.