Glossary · Insurance agency commissions
Net vs. gross commission
Gross commission is the total commission earned on a policy or a statement before any deductions; net commission is what remains after chargebacks, fees, offsets and, inside the agency, the producer’s split are taken out.
What it means
The two figures are measured at different points. The carrier’s statement starts from gross commission on each line and arrives at a net payment after chargebacks and other deductions. The agency then pays producers their split, usually figured on the agency’s commission, which leaves the agency’s own net. Overrides and bonuses may be added at either step.
The deductions matter beyond the agency. Ellen Lichtenstein notes in Insurance Journal (AgentSync blog) that commission clawbacks “can negatively impact an agency’s relationship with both its upstream carrier partners and downstream producers.” Do not confuse either figure with net vs. gross premium, which is about premium after the agency keeps its commission on agency bill.
How it shows on a commission statement
Most direct bill statements show gross commission per line and one net total at the bottom: the deposit you receive. A low net can come from a short-paid line or from a large chargeback, and the total alone does not tell you which.
In reconciliation, and what Lapidar does
Lapidar works line by line rather than from the net total. Positive lines are compared with the commission expected from your book and schedule; negative lines are reported as chargebacks and paired with the payments they reverse. That separates a short payment from a legitimate deduction. Lapidar does not calculate producer splits.
Example
- Gross commission, 42 positive lines
- $9,860.00
- Chargebacks, 3 lines
- −$410.00
- Net paid by the carrier
- $9,450.00
- Producer splits, 40% of $9,450.00
- −$3,780.00
- Agency net commission
- $5,670.00
Common mistakes to check
- Checking only the net deposit, so a short-paid line and an offsetting overpayment cancel out.
- Paying producers on gross commission while the agency receives net of chargebacks.
- Comparing a net figure from one carrier with a gross figure from another.
Questions
What is the difference between net and gross commission?
Gross is the commission before deductions; net is what is left after chargebacks, fees and, for the agency, producer splits.
Are producer splits paid on gross or net commission?
It depends on the producer agreement. Many pay on the agency’s commission after chargebacks; some exclude fees or bonuses. Read the agreement.
Why is my commission deposit lower than the statement lines suggest?
Because the deposit is net: chargebacks and other deductions on the same statement reduce it. List the negative lines to see where the difference went.
Sources
- Insurance Journal (AgentSync blog), What Are Insurance Commission Clawbacks and How Can You Avoid Them?, by Ellen Lichtenstein, February 7, 2024. Retrieved October 14, 2026.
Lapidar is commission reconciliation software for independent insurance agencies, in its founding pilot. Related: producer split.