Last Updated: June 23, 2022

How Does Insurance Commission Split Work? 

TLTR: This article by Agency Height discusses commission splits, how they work and their different forms.

In the insurance industry, commission splits are vital to your success. If it’s too low, you’ve got nothing on the hook; if it’s high then you’ve got the catch. If you’re looking to get into the insurance industry, finding out how commissions are split at prospective carriers will be essential since it’s going to help determine your paycheck.   

In this blog

How Insurance Commissions Work

As an insurance agent, the amount of commission you receive is determined by the amount of insurance you sell and the type of policy. The commission you get is also determined by your existing carriers. Commissions are more substantial with some carriers than with others. The same may apply for the case of bonuses too. 

However, joining a cluster group can help you earn some of the industry’s higher commissions. Commissions are usually allocated between members and their cluster group. Each group divides commissions differently, so do your homework before committing to any of them.  

Types of Commission Models

Agents are paid a commission or a percentage of the premiums for their products in the insurance sector. Agencies use three basic compensation methods: 


Payments for residual commissions are linked directly to premium payments. When an agent closes a deal, they are paid a commission. Also, when the consumer renews the policy, they get paid again in the form of residual commission payments, albeit at a lower percentage rate. Residual commission payments are usually applicable for auto and health insurance contracts, although not consistently.  


The way insurance commissions are paid upfront is quite different. They’re usually linked to life insurance, such as whole life and annuities. An agent earns average 15% of the premium price, but this can be substantially greater.  

In this scenario, the company decides the amount payable by the agency vs. the amount handed to the agent. Payments are frequently distributed amongst various management ranks in larger agencies. The main advantage of upfront commission is that it motivates agents to sell more policies.   


As the name implies, the regeneration compensation model pays agents a percentage of the premium when a client renews a policy. This usually amounts to approximately 2 to 5% of the premium. While it isn’t a lot of money, an agent who has a lot of regenerations or regenerations of high-priced policies might earn a lot more.  

Defining Factors

Despite the basic compensation methods, how insurance brokers get compensated also depends upon the type of insurance offered. Notably, here are a quite few of them including: 

Life Insurance

Life insurance is long-term insurance coverage that usually lasts at least ten years. As a result, agents receive a large upfront commission. New plans often have a 30 to 40% discount on the first year’s premium. The percentage lowers drastically when it transitions to regeneration. 

A life insurance agent, for example, might make 25 to 85% of a client’s first-year premium. Premium regeneration commissions are usually lower. Agents may only make 4 to 15% of their commission on life insurance regenerations. 

As insurance agencies are governed by state legislation, several jurisdictions restrict the number of policy regenerations on which an agent can earn a commission. The commission may be suspended when insurance reaches the 10-year mark from the date of purchase.  

Here are some such commission arrangements for life products: 



Heaped This is the most typical option where an agent earns the most from the sale of the first policy and the least from regeneration.  
Level An agent earns the same commission for both the first and regeneration years with this option. This is usually applicable to group life insurance contracts. 
Levelized An agent earns a significant commission on first-year premium and lower on regenerations for group life products. The difference between this and the piled structure is that the regeneration percentage is more than the average.


Health Insurance

Health insurance offers commission splits similar to long-term or life insurance. So, after selling a policy, an agent will earn the largest commission, followed by a smaller amount on each regeneration. The major distinction is that most health insurance policies are valid for three years only.  

Property & Casualty Insurance

Casualty, automobile, home, and other property insurance plans are not as long-lasting as the other two. As a result, the commission model is based on a significantly smaller percentage. This typically ranges between 5 to 20%, with regenerations even lower.  

Additional Variables

The other factors influencing how much commission an insurance agent earns on a type of insurance are:

Client support

It refers to the agent’s assistance a client receives during and after the sale of the first policy. Building relationships with clients, staying in touch, offering them possibilities for new coverage or cost savings, and so on are all examples of excellent assistance.  

Lead Generation

When an agent fully generates their leads requirement, they can expect to earn high commission. However, the agency might reduce the commission by using a software platform that assists in lead generation.  

Marketing Strategies

This, like lead generation, can result in a reduction in an agent’s commission. An agency may invest in a tool that increases overall marketing efforts in some cases. It could be a cutting-edge software application or a well-designed insurance agency website. It, however, opens the possibility of developing a more extensive client base, which translates to more business and, thus, more commission.  


If two agents work together on a customer, the commission will be divided. Although this isn’t typical, it occasionally happens, particularly when targeting a large client.  


Things To Know

Splits in the stair-step producer

In this model, a new or renewed sale helps the producer earn a standard split. The proportion increases or lowers depending on particular triggers. It includes hitting a new business production capacity annually or meeting a specific book of business revenue baseline.  

Wide splits between new and renewals

To keep producers producing, agents or brokers focusing on organic growth increase the percent split for new business while decreasing the regeneration percent split. An agency with a split rate of 50 to 40 for new and regeneration, for example, might shift to a split rate of 60 to 35 for the same. This allows an agency or a broker to commit significant resources to assist a producer with their overall client service and marketing.  

Equal split for new and regeneration

This approach is implemented to encourage long-term book stability and discourage excessive producer concentration on new business at the risk of disregarding and losing existing clients. For example, 25/ 25% commission for both new and regeneration.  

Splits equal or higher than 50/50

For such a split, the producer may think that the company covers expenses with a traditional split. However, the producer is solely responsible for marketing and customer service. Despite the higher split percentage, The insufficient money to support a producer caused by such a split leaves them with a lower book of business and insufficient resources to create a relevant clientele.  

Bonus on top of salary

Though not so common, some agents/brokers have a set salary going into the year based on a renewal split % (say 35%) of the producer’s prior year-end book of business revenue. This is the producer’s annual compensation, additional quarterly bonuses based on new business acquired, and net fluctuation of regeneration commission.  

Frequently Asked Questions

How to Calculate Insurance Agent Commission?

Multiply the cost of an insurance policy by the amount of your base commission. Then multiply the premium by the amount of your override. Take the two and combine them. This is the total commission you will receive. 

Can an agent split commission with the insured?

No. Rebating is a technique in the insurance industry whereby something of value is given to sell a policy that is not covered by the policy. When a potential insurance buyer receives reimbursement of all or part of the commission for the insurance sale, this is an example of rebating. The practice of splitting insurance commissions with customers to drive a sale is defined as both an unfair form of competition and an unfair or misleading act or practice in the insurance sector, according to the Model Act enacted by the National Association of Insurance Commissioners.

What is street level commission?

The base commission amount given by the company for which you work is known as street level commission.


Agency Height is an online platform that serves as a directory and publishing platform. By bridging the gap between agents and insureds, we’re dedicated to assisting consumers in finding the right insurance. Our publications serve as a one-stop shop for all things related to insurance. You will undoubtedly find what you are looking for, ranging from blogs and articles that assist professionals in growing their businesses to statistical analysis on industry trends.

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