Producer commission split calculator

How the split is worked out

A producer split is the producer’s share of the commission the agency receives, not of the premium. Agreements commonly pay a higher share on new business than on renewals, and treat house accounts differently. The calculator applies each share to its own bucket, then handles the two things that usually cause arguments: who pays an override, and who carries a chargeback.

producer pay = new × new share + renewal × renewal share + house × house share − chargebacks × producer’s chargeback share
agency keeps = total commission − chargebacks − producer pay − override

Worked example

The figures are an example. A producer’s book brings in $12,000 of new business commission and $30,000 of renewal commission this period, and the producer also services $8,000 of house accounts. At 40% on new business, 25% on renewals and nothing on house accounts, the producer earns $12,300. A cancellation charges back $1,500, of which the producer carries 40%, so $600 comes off and the producer is paid $11,700. A sales manager’s 5% override on the $42,000 of new and renewal commission costs the agency $2,100. The agency absorbs the other $900 of the chargeback and keeps $34,700 of the $50,000.

Choices the agreement should spell out

• When a renewal stops being new. Some agreements pay the new-business share for the whole first term, some for twelve months from binding, some until the first renewal is collected.
• Paid on what. Commission received, commission billed, or commission net of fees. On agency bill business the timing can differ by months.
• Chargebacks. Whether the producer shares them at the same rate they were paid, a different rate, or not at all, and over what window after binding.
• Overrides. Whether an override comes out of the agency’s share, as here, or out of the producer’s. The calculator assumes the agency pays it.

Our guide to producer commission splits goes through these in more depth, and commission chargebacks explained covers where the negative lines come from.

Splits start from the statements

Producer pay is only right if the commission under it is right. A missing renewal on a carrier statement is missing from the producer’s check too, and a chargeback nobody traced ends up split on a guess. Reconciling those statements across carriers is the hard part, and it is what Lapidar is built for. It is in its founding pilot. Open an account.

Illustrative only. General information, not accounting, legal, tax or employment advice. Your producer agreements govern.

Questions

How is a producer commission split calculated?

Each share applies to its own bucket of agency commission: the new business share to new business commission, the renewal share to renewals, and the house account share, often zero, to house accounts. Chargebacks the producer shares come off the total.

Does the producer get a share of the premium or of the commission?

Usually of the commission the agency receives, not of the premium. A 40% split on a policy paying the agency $500 is $200. The producer agreement sets the actual rule.

Who pays an override?

It depends on the agreement. This calculator assumes the agency pays it from its own share, figured on new and renewal commission. If your override comes out of the producer’s share, set the override to 0 and lower the producer’s percentages by the override rate; the agency figure then still includes what you pay the manager.

Should producers share chargebacks?

Many agreements claw back the producer’s share when a policy cancels, because the producer was paid on commission the carrier later took back. Whether and how is a term of the agreement. Enter the share yours uses.

Does this calculator store or send my numbers?

No. The calculation runs in your browser. Nothing is uploaded, saved or tracked.