Glossary · Insurance agency commissions
Installment billing
Installment billing, or a pay plan, lets the insured pay a policy’s premium in several scheduled payments instead of one, which changes when and how much commission a carrier pays on direct bill business.
What it means
Typical plans are monthly or quarterly, often with a down payment, and some add an installment fee. Whether commission is paid on the written premium or on premium as it is collected depends on the carrier and your agreement.
On a pay-as-collected arrangement, one policy produces a stream of small lines, and a missed payment or cancellation for non-payment stops the stream. That makes any single month hard to judge on its own.
How it shows on a commission statement
You may see the same policy number on every statement with a small premium and a small commission. Fees usually are not commissionable, so a fee collected with the installment should not carry commission. Check your carrier’s rules, since practice differs.
Example
- Annual premium
- $3,200.00
- Quarterly installment
- $800.00
- Commission rate
- 10%
- Expected per installment
- $80.00
- Expected over the term
- $320.00
Common mistakes to check
- Reading a small installment line as an underpayment of the whole commission.
- Not tracking which installments are due, so a skipped month goes unseen.
- Expecting commission on installment fees.
- Forgetting that a cancellation for non-payment changes how much commission was ever earned.
Lapidar is commission reconciliation software for independent insurance agencies, in development. Related: agency bill vs direct bill reconciliation.