Expected versus received: how to reconcile broker commission
If you don't know what each carrier owes you, you can't tell when they pay short. A method for reconciling commission policy by policy.
Commission arrives in lumps: a credit note from an insurer covering several policies, sometimes months after the premium was remitted. Without a record of what you expected on each policy, there is nothing to check it against.
Start with the rate, per carrier and line
Your agreement with each carrier sets a rate per line of business. Write those down once. Rates change, so keep the date each one took effect: a policy should earn the rate that applied when it started.
Expected commission is simple arithmetic
Expected commission = premium × agreed rate. When an endorsement adds or returns premium mid-term, the expected commission moves with it.
| Policy | Premium | Rate | Expected |
|---|---|---|---|
| Motor fleet | ₦4,200,000 | 10% | ₦420,000 |
| Fire and special perils | ₦1,800,000 | 15% | ₦270,000 |
| Group life | ₦2,500,000 | 12.5% | ₦312,500 |
Match every credit note to policies
When a credit note arrives, split it across the policies it covers and record each amount against the policy with the credit note reference. Anything left unexplained is a question for the carrier.
Decide when short means short
Part-payments are normal. A shortfall is when the carrier has finished paying on a policy and the total is still below what you expected. Close it out explicitly, so it shows up in a list you can take to the carrier, instead of sitting as "partly received" forever.
Action plan
Reconcile monthly
- 01
Load your rates
Every carrier, every line you place with them.
- 02
Record receipts as they land
Against the policy, with the credit note reference.
- 03
Review shortfalls monthly
Export the commission report and take the list to each carrier.
