Renewal commission
Also called: renewals, renewal comp, residual commission
Renewal commission is the commission a carrier pays for each year a policy stays in force after its first year.
Renewals are the recurring income that makes a book of business valuable. They depend on persistency: a policy that lapses stops paying renewals.
Renewal schedules differ by carrier and product, which is one reason agencies struggle to forecast them.
Renewals are the part of the income that keeps coming without new sales, which is why protecting the book protects the agency.
"Renewal commission is the income we can count on, as long as persistency holds."
How can an agency forecast insurance renewal commissions?
Start from in-force policies, apply each carrier's renewal schedule, and adjust for expected lapses based on the book's persistency history.