Missing commissions on renewals: how to spot them

TL;DR

• A missing renewal commission is invisible on the statement itself. You have to start from your list of renewals and look for each one.
• Many apparent misses aren’t: a new policy number, an installment plan, or a statement that hasn’t caught up yet.
• Some are real: a renewal paid at the wrong rate, paid under another code, or not paid at all. Those are worth raising.
• Our working rule is to give each renewal two statement cycles before calling it missing, then ask.

Renewals are where an agency’s book pays off: the policy was won once, and commission arrives year after year. They are also easy to lose track of, because a renewal commission that never arrives leaves no trace on the statement. There is no line saying “not paid”. There’s just nothing. Lapidar is in development to check this for you. Until then, here is what the check involves.

Why missing renewals are hard to see

If you reconcile by reading the statement and ticking off lines, you check what the carrier paid. You never see what it didn’t. Underpaid lines and duplicates show up when you read every line; missing ones only show up when you start from the other side, from your book, and ask of each renewal: where is it?

Why renewal commissions go missing

Some reasons are harmless, and some cost money.

Usually not a problem

• The policy renewed under a new number. Some carriers issue a new number at renewal, or add a new term suffix. It’s paid, but it doesn’t match your book.
• The insured hasn’t paid yet. On direct bill, commission generally follows the carrier’s collection. A renewal effective late in the month, or paid late, can land a statement or two later.
• It’s on installments. The first installment may be small and easy to overlook, and the rest follows month by month.

Worth raising

• The renewal was paid at the wrong rate. Many carriers pay a lower rate on renewals than on new business. That’s expected. A rate below your renewal schedule isn’t.
• It was paid under another agency or producer code. If you have more than one code, or write through a network, check those statements before asking.
• It wasn’t paid at all. The policy renewed, the insured paid, and the commission didn’t come through. This is the case the whole check exists for.

Not a commission problem, but worth knowing

• The policy didn’t renew. It lapsed, was non-renewed, or moved to another agent. Your system may still show it as active, and the reconciliation is often how you find out.

A monthly renewal check

1. Pull last month’s renewals from your system. Every policy with a renewal effective date in the month: policy number, insured, carrier, line, renewal premium.
2. Calculate the expected commission at the renewal rate. Use the renewal rate from your schedule for that carrier and line, not the new business rate.
3. Look for each one on that month’s and the next month’s statements. Match on the normalized policy number, and fall back to insured name if the carrier changed the number.
4. Give each renewal a status. Paid, underpaid, on installments, not yet due, or missing.
5. Carry the open ones forward. Anything not yet due stays on the list for next month.
6. Raise what’s still missing after two cycles. That’s our working rule, not an industry standard. Some carriers pay faster, so tighten it for the ones you know.

Rates in this example: 15% renewal on EX-10490, 12% renewal on the others. Reading the results:

• EX-10490 renewed on August 1 and isn’t on the statement. Three and a half weeks is enough time for most carriers; if it’s also absent next month, it’s $660.00 to raise.
• EX-10503 looked missing until the term suffix was handled. No action.
• EX-10507 was paid at 10% against a 12% renewal schedule. $52.00 to raise.
• EX-10511 renewed on August 27. It would be surprising to see it yet. It carries forward.

When the renewal premium changed

Renewal premium is rarely the same as last year’s. Rates move, exposures change, coverage is added or dropped. If your system still holds last year’s premium, every renewal will look slightly over- or underpaid, and the real differences get lost among the false ones.

Before you judge a renewal line, confirm the renewal premium in your system matches the carrier’s renewal declarations. If your agency management system downloads renewal transactions from the carrier, check that the download actually updated the premium; if renewals are entered by hand, this is where they’re most often stale.

Renewals on agency bill

On agency bill the question flips. You don’t wait for a commission to arrive; you invoice the renewal and keep the commission when the insured pays. The risk is a renewal the carrier issued that never got invoiced, so the carrier’s statement asks you for the net on premium you haven’t collected. Compare the carrier’s list of renewals with your own invoices each month. Our guide to direct bill vs agency bill covers the rest of that check.

Raising a missing renewal

Give the carrier what it needs to find the payment: the policy number in your system and any new number you suspect, the named insured, the renewal effective date, the renewal premium, the renewal rate on your schedule, and the statements you checked. If it was paid under another code, they can tell you which one.

Making it easier next year

• Keep renewal rates in your schedule, per carrier and line, next to new business rates. Most “underpaid renewal” confusion is a missing renewal rate.
• Update the policy number when a carrier changes it. It saves the same search every month for the life of the policy.
• Run the check at the same point every month, when the last big statement has arrived. A habit catches more than an occasional deep dive.
• Treat “didn’t renew” as information. It isn’t money owed, but a lapsed policy your system still thinks is active is worth knowing about for other reasons.