| Year | Policies in force | Premium | Commission | Producer | Agency keeps |
|---|
The defaults are placeholders, not market averages. Use the rates in your carrier contracts and producer agreements.
How the math works
Commission is premium times the carrier's commission rate. In year one that's the new business rate; after that it's the renewal rate, which is often lower. Your producer agreement then splits that commission between the producer and the agency, again usually with different splits for new and renewal business.
The five-year number is where most agencies under-value a policy. Each year, only the retained share of policies renews, and the premium on those policies moves with rate changes and exposure growth. The calculator compounds both, so you can see how much a few points of retention are worth.
What this doesn't include
- Contingent or profit-sharing commission. Carriers pay it on growth and loss ratio across your whole book, not per policy.
- Agency fees. Broker or policy fees you charge on top of premium, where your state allows them.
- Chargebacks. Return commission on cancellations and mid-term premium reductions.
- Your cost to write it. The hours it takes to quote, market and bind the policy. Cutting that time is where quoting tools and AI agents earn their keep: see commercial quoting and AI quoting agents.
Using it for producer comp
Run it twice: once with your current splits and once with the plan you're considering. Compare the "Producer" and "Agency keeps" columns in years two through five. A plan that pays producers more on renewals costs more over time but rewards retention; a plan weighted to new business does the opposite.