How to read a carrier commission statement

TL;DR

• Start with the header: which agency or producer code the statement is for, and which period it covers.
• The transaction type and rate columns decide whether a line is right. A statement that prints no rate leaves you to work it out.
• Negative lines, carry-forward balances and separate sections need their own attention. The total should match your deposit.
• Reading shows what the carrier says it paid. Whether it is correct needs a match against your book, which is the harder job.

A carrier commission statement looks like a list of numbers. It is closer to a ledger written in the carrier’s own shorthand: every carrier chooses its own column names, sign conventions and ways of grouping transactions. This guide covers what most statements contain and what each part tells you. It won’t make the next step easy. Reading a statement is the smaller job; checking it against your book is the larger one.

Start with the header

Before any line, find out whose money this is and which period it covers. The header usually carries the carrier name, your agency or producer code, the statement date, and the period the transactions were processed in. Three things go wrong here more often than people expect.

• More than one code. An agency with several producer codes, or one that writes through a network or aggregator, can receive several statements from one carrier. Missing a statement looks the same as missing commission.
• Statement date versus processing date. The statement date is when it was produced. The transactions on it may have been processed weeks earlier, and the policy effective dates can be older still.
• A statement that covers only part of the carrier. Some carriers issue separate statements by line of business or by program.

The columns, and what they mean

Names differ from carrier to carrier, but most statements carry some version of the following.

• Policy number. The key everything else hangs on. It may be formatted differently from your system, with a prefix, a term suffix or no dashes.
• Insured name. Useful as a fallback match. Often truncated or reordered.
• Transaction type. New business, renewal, endorsement, cancellation, audit and so on. Codes vary and some carriers use only abbreviations. This column decides which commission rate should apply.
• Effective date. The date of the policy term or transaction, not the date you were paid.
• Premium. The premium the commission was calculated on. See written vs earned premium and net vs gross premium, because a statement may use either.
• Rate. The commission rate applied. Some statements print it, some leave you to divide.
• Commission. The amount paid or taken back on that line. Check the sign convention: some carriers print negatives in parentheses, some with a minus, some in a separate debit column.

A short example

Even four lines raise questions. The renewal paid 10%; was that your renewal rate? The second line carries a term suffix your system may not. The last line is a cancellation on a policy that went effective in March, shown in a July statement, which is a chargeback and the subject of its own guide.

Adjustments and the bottom of the page

After the policy lines, many statements add sections that don’t belong to any one policy: carry-forward balances from prior months, fees, advances, or corrections. Then come the totals. Two habits help.

• Check that the lines add up to the total the carrier prints. A gap can mean a line was dropped in a PDF export, or that a prior balance is folded in.
• Check that the total matches the deposit. On direct bill, the payment that reached your bank should equal the statement’s net. If it doesn’t, the difference belongs to someone’s explanation, and you want it to be the carrier’s.

What is usually not on the statement

Contingent commission is generally paid and reported separately, under its own terms, often once a year. Overrides may arrive the same way. Don’t expect a regular monthly statement to reconcile to either.

Why the format makes this harder

Some carriers send CSV or Excel exports. Many send PDFs, and a PDF is a picture of a table. Copying it into a spreadsheet can merge columns, split a long insured name across two rows or drop a negative sign. None of this is difficult in principle. It is slow, and each carrier has its own quirks, which is why the work expands with the number of carriers you write with.

After reading: what to compare

Reading tells you what the carrier says it paid. To know whether it’s right, each line has to be matched to a policy in your book and tested against the rate you should have been paid, and every policy in your book has to be accounted for in turn. The guide to reconciling statements goes through what that check involves, and why statements and your system disagree covers the ordinary reasons for differences. For definitions, see the entries on commission statements and commission reconciliation.