Guide · 10 min read

How to dispute a commission chargeback: what to check, what to ask for, and when

Short answer. Dispute a chargeback only after checking it against the event behind it: the cancellation or change, its effective date, who asked for it, how the return premium was calculated, and the rate the commission was originally paid at. If those don’t support the amount, write to the carrier with the policy, the statement line, the amount taken, the amount you expected and why, and ask for its calculation in writing. Your agency agreement sets the rules, including any time limit.

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Many chargebacks are right. The ones worth disputing usually turn on a date, a method or a rate, and the carrier holds the documents that show which.

By Lapidar, the team building it · October 9, 2026

TL;DR

A chargeback should follow premium: commission comes back on premium that was returned to the insured or, under some agreements, never collected, at the rate it was paid, once.
The common reasons to question one are a backdated effective date, a flat cancel on a policy that ran for months, a pro rata chargeback on a short-rate or minimum-earned refund, and a reinstatement or rewrite with no matching reversal or new commission.
Ask the carrier for the transaction, the cancellation request or notice, the return-premium calculation and the line where the commission was first paid.
Any deadline comes from your agency agreement. Raise it when you find it and keep it open until it is reversed or explained in writing.

This guide is about the step after spotting a negative line: deciding whether to dispute it, what to ask the carrier for, and how to follow it through. What chargebacks are, and the four basic checks on every one, are in commission chargebacks explained. We’re building Lapidar, a tool that will check commission statements line by line; it isn’t available yet. This guide covers property and casualty business; life and health chargebacks, with advanced commissions, follow different rules and aren’t covered. Practice varies between carriers and states, and your agency agreement governs.

When is a chargeback legitimate, and when is it worth questioning?

A chargeback is usually legitimate when premium really went back to the insured (or, under some agreements, was never collected), the commission comes back at the rate it was paid at, the dates match the event, and it is taken once. It is worth questioning when one of those doesn’t hold. The table sets out the common cases.

Typical cases. Whether a given chargeback is right depends on the policy, the state and your agency agreement.
Event	Usually legitimate	Worth questioning
Mid-term cancellation	Commission on the return premium, at the original rate.	A chargeback larger than the commission on the premium actually returned, for example one worked out on a pro rata refund when the refund was short rate or limited by a minimum earned premium.
Effective date	The date the insured asked for, or the date on the carrier’s notice.	An effective date earlier than the date the carrier received the request, with no stated basis such as proof of replacement coverage. It makes the return premium and the chargeback bigger.
Flat cancellation	A policy replaced before it started, issued in error, or whose first payment failed.	A flat cancel on a policy that was in force and collecting premium for months. It may still be right, but ask why it was treated as never in force.
Cancellation for non-payment	Commission on premium that was paid up front and then returned or never collected, if your agreement says so.	A chargeback where commission was only ever paid on collected premium, such as some installment policies. There may be nothing to take back.
Reinstatement	The chargeback is reversed on a later statement.	The chargeback stays after the policy was put back in force.
Rewrite	A chargeback on the old policy and new commission on the new one.	A chargeback with no commission line for the replacement policy.
Change of agent of record	Depends on the carrier and your agreement.	A chargeback dated before the change took effect. Ask for the effective date of the change and how commission was split around it.
Premium audit	Commission on the audit return premium, at the rate the commission was paid at.	A different rate from the one the original premium was paid at, or a reversal of audit commission you were never paid. Some agreements set a separate rate for audit premium.

Pro rata, short rate or flat: which should it have been?

The method decides how much premium goes back, and so how much commission. Three questions settle most cases:

Who asked for the cancellation? Under many policy forms a carrier that cancels refunds pro rata, while an insured who asks to cancel may get less than pro rata, a short-rate refund. Whether short rate applies at all, and how it is worked out, depends on the policy form and state rules. See pro rata and short-rate cancellation.
Is there a minimum earned premium? If the policy has one and it applies to this cancellation (often only when the insured cancels, and some states limit it), the carrier keeps at least that amount however early the policy cancels. Less premium goes back, so less commission should come back.
Was it really flat? A flat cancellation reverses all of the commission. The carrier decides whether a cancellation is flat, and the record in your system may say otherwise.

Whichever method applies, the chargeback should normally be the premium actually returned times the rate the commission was paid at. A worked example of the pro rata and short-rate arithmetic is in commission chargebacks explained. The case it doesn’t cover is a date that moved.

Backdated cancellation · EX-61407Example data

Annual premium, $10.00 a day: $3,650.00
Commission paid at 15%: $547.50
Return premium if effective on day 200 (165 days left): $1,650.00
Chargeback if effective day 200, at 15%: −$247.50
Return premium as processed, effective day 120 (245 days left): $2,450.00
Chargeback taken at 15%: −$367.50
Difference from the day-200 chargeback: $120.00

Paid in full, commission paid up front on the annual premium, pro rata, no fees or minimum earned premium. If the insured had replacement coverage from day 120 and the carrier allows backdating to that date, $367.50 may be right. The question is what the earlier date was based on.

What documents should you ask the carrier for?

An agency can’t cancel a policy itself; it can ask the insurer to, where the policy and state law allow (Big “I” Virtual University, 2012). Whoever asks, the transaction that drives the chargeback sits in the carrier’s system, so that is where the evidence is. Ask for the parts that apply:

The transaction. Effective date, the date it was processed, the reason, and who asked for it.
The request or the notice. The insured’s cancellation request (a signed request, a lost-policy release or another record) and the date the carrier received it, or the carrier’s own cancellation notice.
The return-premium calculation. The method used (pro rata or short rate, and whether a minimum earned premium applied), the table or percentage applied, and any fees or taxes left out.
The original payment. The statement and line where the commission was first paid, and the rate.
The billing history, for non-payment cancellations: what was billed, what was collected and when.
The audit summary, for audit chargebacks: the premium before and after.
The follow-on transaction, for reinstatements and rewrites: the reinstatement date, or the new policy number and where its commission was paid.

On agency bill business the chargeback usually appears on the account current as a return premium with negative commission, and reduces what you remit. Raise a disputed one before the account current is due if you can, remit as your agency agreement requires unless the carrier agrees an adjustment in writing, and don’t hold up the insured’s return premium while you dispute the commission (see agency bill reconciliation). On direct bill it is a negative line on the commission statement.

On your side, pull your own record of the same event: the activity in your agency management system, your copy of the request, and any correspondence with the insured about dates. Putting the two records side by side often settles it.

How do you write the dispute?

One item per chargeback, with the figures the carrier needs to check you. The block below slots into a fuller letter; the rest of the letter, with a complete template, is in how to write a commission discrepancy letter.

TemplateOne block per chargebackItem [our reference]: chargeback
Policy: [number], named insured [name]
Statement: [date], line [n], chargeback of $[amount]
Event on our file: [cancellation / non-payment cancellation / endorsement / audit / reinstatement / rewrite / agent-of-record change], requested by [insured / carrier] on [date], effective [date]
Return premium: $[amount] ([pro rata / short rate], [minimum earned applied: yes / no], per [document])
Commission originally paid at: [x]% (statement [date], line [n])
Expected chargeback: $[amount]
Difference: $[amount]
Request: please reverse $[difference], or send the calculation you used and [the cancellation request with the date received / the notice / the audit summary].

Say what doesn’t fit, not what you suspect. “The effective date on your statement is 80 days before the request on our file” gets a faster answer than “this chargeback is wrong”.

How long do you have, and how long does it take?

There is no single deadline. Any limit on raising a statement error comes from your agency agreement, and agreements differ. Chargebacks themselves can arrive months after the event, so the clock on the event and the clock on the statement line may not be the same. How long carriers take to answer varies.

What helps, whatever the limits:

Raise it when you find it, and write down the date you did.
Ask for an answer by a date in the request itself.
Keep it open on your open-items log (part of the routine in carrier commission statement reconciliation) until a reversal arrives or the carrier explains it in writing. Then check the reversal matches the item, for the right amount, once.
Follow up once after the date, then take the same item to your marketing rep or territory manager.

What about the producer’s share while it’s disputed?

If producers are paid a share of commission, a chargeback often flows through to them under your producer agreement. Whether you pass it on while the dispute is open, or hold it until it is settled, is set by those agreements and, for employed producers, by state wage law, which can limit deductions from pay; what matters is applying the same rule every time. See chargebacks and clawbacks in producer splits.

What if the carrier says the chargeback stands?

Ask for the reason in writing, with the provision of the policy or the agency agreement it relies on, and file it with the item. Read that provision yourself. If the answer turns on how the agreement should be read and the amount justifies it, that is a question for someone qualified to advise on contracts, not for a statement check. Sometimes this is where it should end: the carrier’s record shows something your file didn’t.

Why this is hard at scale

A chargeback arrives on a later statement than the commission it reverses, sometimes much later, and sometimes under a different policy number after a rewrite. Checking it means finding that original payment line and its rate, the event behind it in your own system, and anything already raised about it. An IA Magazine column by Jake Gilbert of Vertafore, a company that sells agency software, lists “trying to understand why a payment changed” among the things many agents do to verify their pay (IA Magazine, September 2026). For one chargeback that is manageable; across every carrier, every month, it is the work that tends to get skipped.

Where Lapidar fits

We’re building Lapidar to tie each chargeback to the payment it reverses, check the rate and the amount against it, and carry disputed items forward until they clear, inside the Lapidar web app. The decision to dispute, and the conversation with the carrier, stay with you; Lapidar won’t contact your carriers. It is in development and not live, it has no customers yet, and we’ll say so until that changes. If you’d like to try it when it’s ready, the early-access list is below.

Frequently asked questions

Can a carrier charge back commission on a cancellation for non-payment?

It depends on how the commission was paid and on your agency agreement. If commission was paid up front on the full premium, commission on the premium that is returned or never collected may come back. If it was paid only as premium was collected, there may be little or nothing to take back. Ask for the billing history before you accept or dispute it.

Should a chargeback use the current commission rate or the original one?

Normally the rate the commission was originally paid at. If your schedule changed between the payment and the cancellation, a chargeback at the new rate takes back a different amount from the one you received. Your agency agreement governs, so check it if the carrier disagrees.

Is there a deadline for disputing a commission chargeback?

Any time limit comes from your agency agreement, and agreements differ. We can’t tell you the limit for your carrier. Raise a chargeback when you find it, record the date you raised it, and keep it open until it is reversed or explained in writing.

Sources

Big “I” Virtual University, Can Agencies Cancel Agency-Billed Policies?, VU Faculty, posted May 8, 2012. Retrieved October 9, 2026.
IA Magazine, What Compensation Administration Means to the Agent-Carrier Relationship, by Jake Gilbert, September 16, 2026. Retrieved October 9, 2026.

Lapidar is commission reconciliation software for independent insurance agencies, in development. Related: commission chargeback calculator · how to write a commission discrepancy letter.