Book of business and commission glossary
Plain definitions of the book of business, commission and payout terms agency principals and operations leads deal with every month. Written for brokerages that sell Medicare, life, health and annuities across several carriers.
Book of business
7 termsBook of business
A book of business is the full set of clients and in-force policies an agent or agency services and earns commission on.
Read more → Book of businessBook of business analysis
Book of business analysis is reviewing an agency's clients and policies as a whole to find coverage gaps, cross-sell opportunities, retention risks and how each agent's part of the book is doing.
Read more → Book of businessBook of business valuation
Book of business valuation is estimating what an agency's book is worth, usually based on the recurring renewal commission it produces and how reliably that revenue continues.
Read more → Book of businessCoverage gap
In book of business analysis, a coverage gap is a product a client or household would reasonably need but doesn't hold with the agency, such as life insurance alongside a Medicare plan.
Read more → Book of businessCross-sell opportunity
A cross-sell opportunity is an existing client who is likely to need another product the agency offers, identified from the policies and data already in the book.
Read more → Book of businessHousehold view
A household view groups all the policies held by the people in one household, so an agency sees a family's full coverage instead of separate policy records.
Read more → Book of businessSingle-product client
A single-product client is a client or household that holds only one type of insurance product with the agency.
Read more →Commissions
10 termsAdvanced vs as-earned commission
An advanced commission pays part of a policy's first-year commission upfront, while as-earned commission is paid month by month as the client pays premiums.
Read more → CommissionsCarrier commission statement
A carrier commission statement is the report an insurance carrier sends with each commission payment, listing the policies paid, the amounts and any adjustments or chargebacks.
Read more → CommissionsCommission chargeback
A commission chargeback is a carrier taking back commission it already paid, usually because a policy was cancelled, lapsed or replaced within a set period.
Read more → CommissionsCommission reconciliation
Commission reconciliation is matching what each carrier actually paid against what the agency expected to be paid for each policy, and flagging the differences.
Read more → CommissionsCommission schedule (contract level)
A commission schedule sets the commission rate for each product at each contract level, and an agent's contract level determines which rate they are paid.
Read more → CommissionsFirst-year commission FYC
First-year commission (FYC) is the commission paid on a policy's first year in force, usually the largest commission the policy will produce.
Read more → CommissionsMissing commissions
Missing commissions are payments an agency was owed for a policy but didn't receive, or received at the wrong amount.
Read more → CommissionsOverride commission
An override commission is commission paid to an upline (an agency, manager or marketing organization) on business written by agents below them, on top of the writing agent's own commission.
Read more → CommissionsRenewal commission
Renewal commission is the commission a carrier pays for each year a policy stays in force after its first year.
Read more → CommissionsTrail commission
A trail commission is an ongoing commission paid on an annuity, usually a percentage of the contract value, for as long as the contract stays in force.
Read more →Payouts and splits
4 termsAgent of record AOR
The agent of record (AOR) is the agent a carrier has on file for a policy, who receives the commission and services the client; the writing agent is the one who wrote the original application.
Read more → Payouts and splitsAgent payout
An agent payout is the amount an agency owes each of its agents for a period, after applying commission splits, overrides, chargebacks and any agency share.
Read more → Payouts and splitsFMO, IMO and MGA
FMOs (field marketing organizations), IMOs (insurance marketing organizations) and MGAs (managing general agencies) are intermediaries between carriers and independent agents that provide contracts, support and higher commission levels.
Read more → Payouts and splitsSplit case (commission split)
A split case is a policy where two or more agents share the commission, in percentages agreed in advance, such as a senior agent and a newer agent who worked the case together.
Read more →Retention
4 termsChurn signals
Churn signals are changes in a client's data that suggest they may leave or let a policy lapse, such as missed payments, a change of address, no contact in a long time or a policy replaced elsewhere.
Read more → RetentionClient retention rate
Client retention rate is the share of an agency's clients or households who are still clients after a period, usually a year.
Read more → RetentionPersistency rate
Persistency rate is the share of policies still in force after a set period, often 13 or 25 months, used by carriers and agencies to measure how well business sticks.
Read more → RetentionPolicy lapse
A policy lapse is when an insurance policy ends because premiums weren't paid or the client cancelled or replaced it.
Read more →Reporting and data
4 termsAgency management system AMS
An agency management system (AMS) is the software an insurance agency uses to store client and policy records, documents and, in many cases, commission data.
Read more → Reporting and dataAgent scorecard
An agent scorecard summarizes each agent's results in one view: production, issued business, persistency, chargebacks and open opportunities in their book.
Read more → Reporting and dataProduction report
A production report shows how much business an agency and each agent wrote, issued and earned in a period, by carrier and product.
Read more → Reporting and dataSubmitted, issued and placed business
Submitted business is applications sent to carriers, issued business is policies the carrier approved, and placed (or issue-paid) business is policies in force with a first premium paid.
Read more →A–Z index
A
- Advanced vs as-earned commission
- Agency management system (AMS)
- Agent of record (AOR)
- Agent payout
- Agent scorecard
- AMS → Agency management system
- AOR → Agent of record
C
F
- First-year commission (FYC)
- FMO, IMO and MGA
- FYC → First-year commission
I
- IMO → FMO, IMO and MGA
M
- MGA → FMO, IMO and MGA
- Missing commissions