Guide · 8 min read
Starting an independent insurance agency: the commission side
Short answer. Your commission depends on how you reach carriers: direct appointments pay you on the carrier’s schedule under your own code, while an aggregator or network pays you its share of the commission, usually on its own statement. Expect a lag: on direct bill business, commission typically arrives on a statement after the customer pays, often the following month. From month one, set up three things: an archive of every statement, a copy of every commission schedule and agreement, and a monthly reconciliation routine.
A license lets you sell; your appointments and contracts decide what you’re paid.
TL;DR
- Commission comes from appointments: either your own, with each carrier, or through an aggregator’s.
- Through a network you are usually paid net of its share, or pay it fees, and the contract decides who owns the book if you leave.
- First commission usually arrives weeks after the sale; plan cash for it.
- Keep every statement, schedule and agreement from day one. Reconcile monthly, before the backlog grows.
- This is not legal or licensing advice. Licensing and appointment rules are set by each state.
What does this guide cover, and what doesn’t it?
It covers the commission side of starting an independent property and casualty (P&C) agency in the United States: how carrier access shapes what you are paid, when money arrives, and the records to keep. It doesn’t cover licensing, entity formation, errors and omissions insurance or state filings. Those rules are set by each state; start with your state’s department of insurance, which you can find through the NAIC’s directory of insurance departments, and get legal and tax advice. Lapidar is a tool that checks commission statements line by line; it is in its founding pilot.
How does a new agency get paid by carriers?
Through carrier appointments. The state licenses you; a carrier appoints you, usually with an agency agreement that sets commission, billing and termination terms, and a commission schedule that sets rates by line, state and transaction. Each appointment comes with an agency code, and the carrier pays commission per code on its statement. The kinds of pay an agency can receive are covered in how independent insurance agents get paid.
New agencies often find direct appointments hard to get at first, because carriers may look for experience, premium volume commitments or an existing book. Requirements differ by carrier, and they change.
To see which insurance groups write the most premium in your state, start with the state insurance department’s market share report; we summarize California’s top P&C groups with a link to the source. Size alone doesn’t tell you whether a group appoints independent agencies.
Should a new agency use an aggregator or get direct appointments?
Many start with an aggregator, cluster or network, then add direct appointments as the book grows; some stay in a network for good. From the commission side, the difference looks like this:
| Direct appointment | Through an aggregator or network | |
|---|---|---|
| Who pays you | The carrier | Often the network, from the carrier’s commission |
| Rate you receive | The carrier’s schedule | The carrier’s rate minus the network’s share; or the full rate, with fees paid separately |
| Statement | Carrier statement, your code | Often the network’s statement, under its code |
| Contingent pay | Your own agreement, if you qualify | Depends on the network contract |
| Who owns the book if you leave | Set by the agency agreement | Set by the network contract; read this clause first |
A network gives you markets you couldn’t reach alone, in exchange for a share of commission or fees and, under some contracts, limits on where your book can go. The aggregator entry quotes an IA Magazine article on what alliances typically charge to join, stay and leave.
How do commission splits with a network work?
Usually the network receives the carrier’s commission and pays you your share, net of its cut, on its own statement. Some charge a flat monthly fee instead of, or as well as, a percentage. Checking it is a two-step job: first the carrier’s rate on each policy, then the network’s share against your contract. If you only check the final figure, a carrier underpayment and a wrong split look the same.
- Premium
- $3,200.00
- Carrier commission at 12%
- $384.00
- Network share, 25% of commission
- −$96.00
- Paid to your agency
- $288.00
If you hire producers, their split comes out of what your agency receives, not out of the carrier’s gross; see producer commission splits.
When does a new agency get its first commission?
Later than most new owners expect. On direct bill business, the carrier bills the customer and typically pays commission on a statement after the premium is collected, often monthly, so the first payment can arrive a month or more after the sale. On installment plans, some carriers pay commission as each installment is paid rather than up front. Through a network, add the network’s own payment cycle on top. On agency bill, you collect premium yourself and remit net of commission, which brings cash forward but adds remittance deadlines and, in many states, a separate premium trust (fiduciary) account. The full comparison is in direct bill vs agency bill commissions.
How should a new agency plan cash flow around commission?
Assume a lag of at least one statement cycle between selling a policy and being paid for it, and longer through a network or on installment billing. Then allow for money flowing back: a cancellation takes back unearned commission as a chargeback, sometimes months after you were paid. A young book has no renewals yet to offset these, and the chargeback calculator shows how much a mid-term cancellation can take back. Renewal commission builds only as policies renew, so the first year usually carries the least of it. A week-by-week forecast for this is in insurance agency cash flow.
What should a new agency set up from month one?
- A statement archive. Download every statement from every carrier and network portal each month, in PDF and in CSV or Excel where offered, with one naming convention. Many portals keep only a limited history. See how to download and archive commission statements.
- A file of agreements and schedules. Each agency agreement, network contract and commission schedule, with effective dates. When a rate changes, keep the old schedule; you’ll need it to check older lines.
- Your book in one place. Every policy with carrier, code, effective date, premium and expected rate, in your agency management system. That is the expected side of every check.
- Producer agreements in writing, before the first producer is paid, including what happens to their share on chargebacks.
- A reconciliation routine. Monthly, while volumes are small and errors are easy to trace.
What does the monthly commission routine look like?
Collect every statement, match each line to a policy in your book, compare the commission to premium times the expected rate, list what is missing, underpaid or paid twice, and raise it with the carrier or network with the policy numbers attached. The steps are listed in the monthly reconciliation checklist, and the method in how to reconcile carrier commission statements. Starting the habit at fifty policies is far easier than at fifteen hundred, and it gives you the revenue figure your agency KPIs are built on.
Where Lapidar fits
Lapidar is built for the routine above: it reads carrier and network statements in their own formats, matches each line to your book, and flags missing, underpaid and paid-twice commission. Raising issues stays with you; Lapidar won’t contact your carriers. It is in its founding pilot, it has no customers yet, and we’ll say so until that changes.
Frequently asked questions
How do new independent insurance agencies get carrier appointments?
Either directly from each carrier, which may require experience, a volume commitment or an existing book, or through an aggregator, cluster or network that already holds appointments. Requirements vary by carrier and state.
How long does it take to get paid as a new insurance agency?
On direct bill business, commission typically arrives on the carrier’s statement after the customer pays, often the following month. Through a network or on installment billing it can take longer.
Do aggregators take a share of commission?
Usually, yes, or they charge fees, or both. The network contract sets the share and also who owns the book if you leave, so read it before you sign.
What records should a new agency keep for commissions?
Every carrier and network statement, every agency agreement, network contract and commission schedule with effective dates, producer agreements, and a book of policies with expected rates. Retention periods depend on tax rules, state law and your agreements.
Sources
- National Association of Insurance Commissioners, Insurance Departments (directory of state insurance departments). Retrieved October 12, 2026.
Lapidar is commission reconciliation software for independent insurance agencies, in its founding pilot. Related: insurance agency commission structure explained · commissions after an appointment ends · override commission.