Glossary · Insurance agency commissions
Override commission
An override commission is an additional commission paid on top of the base commission, typically to a party above the writing agent, such as an agency network, a managing general agent or a sales manager, based on business produced by others.
What it means
The term is used loosely, so the contract matters more than the word. In P&C, carriers may pay an agency network or aggregator an override on the combined volume of its member agencies, and the network may pass some of it on. In life and health insurance, an override is commonly paid to upline managers on the production of the agents below them.
An override is different from a contingent commission. An override is usually a fixed percentage on premium as it is written; a contingent commission depends on year-end results.
How it shows on a commission statement
An override may appear as its own line, on its own statement, or folded into a single rate, so a 13% base plus a 2% override shows as 17%. If you are entitled to an override and the statement shows only the base rate, it is either missing or paid somewhere else. Find out which before counting it as short.
Example
- Premium
- $10,000.00
- Base commission at 13%
- $1,300.00
- Override at 2%
- $200.00
- Total expected
- $1,500.00
Common mistakes to check
- Override calculated on a different premium base from the base commission.
- Losing track of an override paid quarterly or on a separate statement.
- Forgetting that a chargeback on the base commission usually reverses the override too.
- Confusing an override with contingent pay, and expecting it at the wrong time of year.