How Much Do Insurance Agents Make Per Policy?
Updated
What an agent makes on one policy comes from three numbers: the premium, the commission the agency earns, and the share of that commission the agent keeps.
The three numbers
Premium is what the customer pays for the policy, usually for a year or six months.
Agency commission is the percent of that premium the carrier pays the agency. It is set in the agency's contract and is often higher on new business than on renewals.
The agent's split is the percent of the agency's commission that goes to the agent who sold it. It is set in the agent's commission plan. Some agents are paid a salary instead, or a salary plus a smaller split.
Multiply them together and you get what the agent makes on that policy:
Agent's pay = premium × agency commission × agent's split
A worked example
Example. A customer buys a car policy for $1,000 a year. The agency's commission on new business is 10%, so the agency earns $1,000 × 10% = $100. The agent's split is 40%, so the agent makes $100 × 40% = $40 on that policy. The agency keeps $60.
Now change one number at a time and watch the result:
| Change | Agency earns | Agent makes |
|---|---|---|
| Example as written | $100 | $40 |
| Premium is $2,000 | $200 | $80 |
| Agency commission is 15% | $150 | $60 |
| Agent's split is 25% | $100 | $25 |
Each number moves the result the same way. Double any one of them and the agent's pay doubles.
Per policy pay
Some plans pay a flat amount on every policy instead of a percent, or on top of it.
Example. A plan pays $10 for each policy plus 20% of the agency's commission. On the $1,000 car policy above, the agent makes $10 + ($100 × 20%) = $30.
A flat amount rewards the number of policies. A percent rewards the size of each one. Many plans use both, so a small policy still earns something and a large one earns more.
Renewals
When the policy renews next year, the agency usually earns commission again, often at a lower rate. Whether the agent earns on that renewal depends on the plan.
Example. The $1,000 policy renews. The agency's renewal commission is 8%, so the agency earns $80. If the plan pays the agent 20% on renewals, the agent makes $16. If it pays nothing on renewals, the agent makes $0.
This is why two agents with the same new sales can end the year far apart. The one whose plan shares renewals keeps earning from the customers who stay.
When a policy cancels
If a customer cancels early, the carrier can take back part of the agency's commission. That is a chargeback. Many plans then take back the matching share from the agent.
Example. The $1,000 policy cancels halfway through the year. The carrier takes back half the agency's $100, which is $50. If the plan passes the same share on to the agent, the agent gives back half of their $40, which is $20.
Bonuses on top
Many agents also earn bonuses: a higher rate after a monthly target, a reward for a streak, or a team bonus. These sit on top of the per policy math above, so the real amount per policy is often higher in a strong month. How insurance agency commissions work walks through each kind.
Work it out for your own plan
To answer the question for your office, gather your agency commission rates by product, the split or flat amounts in each plan, and the renewal and chargeback rules. Then run one policy through the formula above for each product you sell.
The producer commission calculator does this for a month of sales. In Agency Edge, each paycheck lists every sale behind it with its rate and what it earned, so you can see the per policy amount for every person.
See every producer’s per policy pay
Each paycheck lists every sale behind it, with its rate and what it earned.