Glossary · Insurance agency commissions
Carrier termination
A carrier termination is the end of the agency agreement and appointment between a carrier and an agency, by either side or by mutual agreement; it usually stops new business at once while existing policies run off under the agreement’s and the state’s rules on notice, renewals and commission.
What it means
Termination rules come from two places: the agency agreement and state law. Washington is one state that writes them into statute. RCW 48.17.591 requires an insurer ending a written agency contract with an independent producer to give at least 120 days’ notice (with exceptions), and says that during that period the producer “shall not write or bind any new business on behalf of the terminating insurer without specific written approval,” unless the contract provides otherwise.
What it means for commission: the same section requires renewals for a year after termination for policies that still qualify, and states that “The rate of commission for any policies renewed under this provision shall be the same as the insurance producer would have received had the agency agreement not been terminated.” Other states and other agreements are less generous; a Big “I” review of a Hanover agreement flags that “The Agent is not entitled to commissions on business renewed six or more months after termination.” The full run-off check is in the guide on commissions after a carrier appointment ends.
How it shows on a commission statement
After a termination, statements change shape slowly: new business stops, renewals continue for a while, endorsements and audits on old policies keep arriving, and chargebacks can come months later. The risk is silent: a renewal that should have been paid simply does not appear, or appears at a reduced rate.
In reconciliation, and what Lapidar does
Lapidar checks each run-off statement against your book: a policy still in your book with something due in the period and no payment is reported as Missing, and a lower rate than your schedule as Underpaid. It does not know the termination date or the run-off terms, so keep the book and schedule for that carrier as they should be under the agreement.
Example
- Termination effective
- 1 March
- Renewals due March–August in the frozen policy list
- 14
- Renewals paid on run-off statements
- 11
- Paid at the pre-termination rate of 15%
- 9
- Missing renewals
- 3
- Paid at a reduced rate
- 2
Common mistakes to check
- Not making a frozen list of policies in force on the termination date, so missing renewals cannot be counted.
- Assuming renewals stop at termination, or that they continue forever. The agreement and state law decide.
- Accepting a reduced run-off rate without checking whether state law or the agreement keeps the old one.
- Forgetting that chargebacks and audits on old policies still arrive after the relationship ends.
Questions
Do I still get renewal commission after a carrier terminates my agency?
Often for a period, under the agreement and state law. Washington, for example, requires renewals for a year at the same commission rate for policies that still qualify; some agreements pay renewals for only six months.
How much notice must a carrier give before terminating an agency?
It depends on the state and the agreement. Washington’s RCW 48.17.591 requires at least 120 days for an independent producer’s written contract, with exceptions.
Can I keep writing new business during the notice period?
In Washington, not without the insurer’s specific written approval unless the contract provides otherwise. Check your own state and agreement.
Sources
- Washington State Legislature, RCW 48.17.591: termination of agency contract. 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: agency agreement.