Glossary · Insurance agency commissions
Sub-producer
A sub-producer is a licensed insurance producer who places business through another agency, under that agency’s carrier appointments and codes, and is paid a share of the commission by the agency rather than directly by the carrier.
What it means
The NAIC glossary defines a producer as “an individual who sells, services, or negotiates insurance policies either on behalf of a company or independently.” A sub-producer does that through someone else’s agency. Licensing and appointment rules are set by each state; New York’s Department of Financial Services, in OGC Opinion No. 08-04-11, concluded that “provided that the agent is properly appointed by the insurer, an individual insurance agent may act as a sub-producer for a corporate insurance agent, and may receive commissions from that corporate insurance agent.”
How it works: the sub-producer brings the client; the agency places the policy with its carrier under its agency code. The carrier pays the agency, and the agency pays the sub-producer the split in their agreement. Ownership of the expirations is set by that agreement too.
Why it matters for agency commissions
The carrier’s statement shows only the agency’s code, so the agency has to know which policies belong to which sub-producer and pay each the right split on each line, including chargebacks. Errors run both ways: the sub-producer can be underpaid on a renewal the carrier paid, or overpaid on a policy the carrier later charged back.
A sub-producer needs a license in each state where they sell, resident or nonresident, and is identified across states by a National Producer Number; the agency also tracks their continuing education and, where carriers pass them on, appointment fees. An agency perpetuation plan should say who owns a sub-producer’s accounts.
How it shows on a commission statement
The carrier statement does not name sub-producers. The agency maps each policy to a producer in its management system and builds a producer statement from the carrier lines. A sub-code, where the carrier issues one, makes the mapping easier.
Example
| Policy | Transaction | Agency commission | Split | Sub-producer |
|---|---|---|---|---|
| EX-76322 | New business | 600.00 | 50% | 300.00 |
| EX-76322 | Endorsement | 80.00 | 50% | 40.00 |
| EX-76322 | Return premium | −120.00 | 50% | −60.00 |
| Total | 560.00 | 280.00 |
Splits on this page are invented; the agreement between the agency and the sub-producer sets the real one, including whether chargebacks are shared.
Common mistakes to check
- Paying the sub-producer on the agency’s expected commission instead of what the carrier actually paid.
- Forgetting to pass chargebacks through to the sub-producer, or passing them through when the agreement says not to.
- Missing policies that have no producer mapped in the agency system.
Questions
What is a sub-producer in insurance?
A licensed producer who writes business through another agency’s appointments and codes and is paid a share of commission by that agency.
Does a sub-producer need to be licensed and appointed?
Licensing is required to sell insurance, and appointment rules vary by state. New York’s DFS has said an individual agent may act as a sub-producer for a corporate agent if properly appointed by the insurer.
Who pays a sub-producer?
Usually the agency, out of the commission the carrier paid it, under the split in their agreement.
Sources
- National Association of Insurance Commissioners, Glossary of Insurance Terms, entry for producer. Retrieved October 14, 2026.
- New York State Department of Financial Services, OGC Opinion No. 08-04-11: Insurance Sub-producers, April 7, 2008. Retrieved October 14, 2026.
Lapidar is commission reconciliation software for independent insurance agencies, in its founding pilot. Related: producer split.