Glossary · Insurance agency commissions
Renewal premium
Renewal premium is the premium a carrier charges to continue an existing policy for a new term, re-rated on the carrier’s current rates and the insured’s current exposures and claims, and it is the base for the agency’s renewal commission.
What it means
A renewal is priced again, not copied. The NAIC’s consumer article Why Are My Insurance Premiums Increasing? starts from the principle: “Insurance companies set premiums based on the expected cost of future claims.” At each renewal the carrier applies its current filed rates, the insured’s current exposures and, often, its claims history from the loss run.
How it works: the carrier issues a renewal offer or automatic renewal before the term ends. The agency reviews the change, remarkets if needed, and the policy renews at the new premium, or moves, or nonrenews.
Why it matters for agency commissions
Renewal commission is renewal premium times the renewal rate, and both move. A 9% premium increase with an unchanged rate should raise commission by 9%; a renewal paid at last year’s premium, or at the new-business rate, is a statement error. Renewals are also where commission goes missing entirely, when a policy renews but no line is paid.
How it shows on a commission statement
A renewal line carries the new term’s effective date, transaction code RN or similar, and premium for the new term. Compare it with last year’s line on the same policy: premium, rate and commission should each make sense against the renewal offer.
Example
| Policy | Term | Premium | Rate | Commission |
|---|---|---|---|---|
| EX-75011 | 2025–26 renewal | 2,200.00 | 12% | 264.00 |
| EX-75011 | 2026–27 renewal | 2,420.00 | 12% | 264.00 |
Premium rose 10% but commission did not; at 12%, $290.40 was due. The statement figured commission on the old premium. Commission rates on this page are invented; your agency agreement and commission schedule set the real ones.
Common mistakes to check
- Checking that a renewal was paid, but not that it was paid on the new premium.
- Applying the new-business rate to a renewal, or the reverse.
- Not noticing a renewal that never appeared on any statement.
Questions
What is a renewal premium?
The premium the carrier charges to continue a policy for its next term, recalculated on current rates, exposures and claims.
Why did my renewal premium go up?
Carriers set premiums on the expected cost of future claims, so changes in rates, exposures or claims history can move the renewal premium. Your carrier or agent can explain the specific change.
How is renewal commission calculated?
Renewal premium times the renewal commission rate in the agency’s schedule, which may differ from the new-business rate.
Sources
- National Association of Insurance Commissioners, Why Are My Insurance Premiums Increasing? Retrieved October 14, 2026.
Lapidar is commission reconciliation software for independent insurance agencies, in its founding pilot. Related: new business vs. renewal commission.