Glossary · Insurance agency commissions
New business vs renewal commission
New business commission is paid on a policy’s first term with a carrier, and renewal commission on each term after that; some carriers pay a different rate for each, while others pay the same.
What it means
Where the rates differ, the transaction type on each line decides how much you’re paid, so a coding error changes the commission. The difference also matters inside the agency: producer agreements often pay producers a different split on new and renewal business.
The boundary is not always obvious. A policy rewritten with a new policy number, a book transferred from another agency, or business moved from an aggregator code to a direct appointment can be treated as new by one party and as renewal by another. The agency agreement and the carrier’s own rules decide which applies.
How it shows on a commission statement
Statements mark each line with a transaction type, often as a short code such as NEW, NB, REN or RWL. Codes vary by carrier, so keep a note of what each carrier uses. A renewal that was never processed doesn’t appear as a wrong code; it doesn’t appear at all.
Example
| Policy | Coded as | Premium | Paid | Expected | Result |
|---|---|---|---|---|---|
| EX-50201 | New | 1,500.00 | 225.00 | 225.00 | OK |
| EX-50188 | Renewal | 1,620.00 | 162.00 | 162.00 | OK |
| EX-50214 | Renewal | 1,300.00 | 130.00 | 195.00 | First term, coded as renewal |
EX-50214 is the policy’s first term with this carrier, so in this example $65.00 is owed.
Common mistakes to check
- Not checking the transaction type at all, only the amount.
- Assuming new business always pays more. That depends on the carrier and the line.
- Paying producers the new business split on what the carrier paid as renewal, or the reverse.
- Looking only at lines that appear. Missing renewals need a check that starts from your own book.