Workers Compensation Insurance Commission

Workers' compensation commission refers to the amount of premium paid to an insurance agent or agency by an insurance carrier for writing and servicing an insurance policy.  While most agents and agencies prefer not to disclose commission information, we believe it is important to help our clients and prospects understand how the workers' compensation insurance commission system works. Insurance commission definition: a fee paid to an agent or employee for transacting a piece of business or performing a service. Also a percentage of the money received from a total paid to the agent responsible for the business.

Commission is almost always paid as a percentage of gross premium.  However, in some cases, carriers will also allow fee based commission as well as a reduced commission percentage on larger premium programs or more non-traditional products such as workers compensation retro plans, captives, and high deductible programs.

Generally speaking, work comp insurance carriers actually pay varying amounts of workers' compensation commission.  Commission percentage amounts can vary depending on the 1) the state, 2) an agencies total dollar amount of premium, 3) the combined loss ratio of the written premium, or 4) a combination of these factors.

Most carriers will typically pay somewhere between 8% and 12% commission to an agent or agency.  When agents work through and agency or with a middleman such as a wholesaler they will most likely receive about 50% of the earned commission.

Here is a list of what an agent or agency should be providing in return for commission?

• Consulting and advising clients prior to carrier submission underwriting.

  • Your agent should have a thorough knowledge of class codes, laws, and underwriting.

  • Your agent should be looking for areas to save you money.

  • Your agent should be willing and able to give direct advice on work comp rules and laws.

• Provide quotes and options for work comp coverage.

  • Your agent should have multiple carriers and markets to provide you the best value and most options available.

• Issue certificates of insurance and provide ongoing service.

  • Your agent should issue all certificates or evidence of insurance timely and as needed.

  • Your agent should be available for consultation regarding policy changes.

• Assist with Claims and Renewals.

  • Your agent should be willing to guide you during the claims process.

  • Your agent should remarket your coverage each year prior to your renewal.