Striking the Right Balance for Insurance Producer Compensation
August 19, 2025
By Daniel Markham
In a market where risk management and profit maximization go hand-in-hand, how you pay your producers matters. Striking the right balance where incentives are concerned is key to maximizing revenue and profitability while maintaining talent motivation and retention.
Factors that may influence a producer commission structure at an insurance company include:
- Insurance line
- Corporate strategy
- Focus on new client growth vs. retention
- Producer’s tenure or experience
- Producer’s book of business
To help inform discussions on producer compensation, Compensation Resources has conducted a review of publicly available information regarding commission disclosure practices across major insurance carriers.
Findings
The following table presents our findings on the commissions paid to producers, as a percentage of annual premiums, broken down by insurance line.
|
|
Commission
|
|
Insurance Line
|
Minimum
|
Average
|
Maximum
|
|
Commercial Auto
|
5.5%
|
13.6%
|
23.8%
|
|
Commercial Property
|
6.5%
|
16.2%
|
25.9%
|
|
Commercial Flood
|
0.5%
|
12.8%
|
25.0%
|
|
Commercial Liability
|
3.3%
|
13.5%
|
25.0%
|
|
Personal Auto
|
6.3%
|
14.0%
|
25.3%
|
|
Personal Property
|
5.5%
|
15.3%
|
27.5%
|
|
Personal Flood
|
5.5%
|
15.3%
|
25.0%
|
|
Personal Fire
|
3.0%
|
11.5%
|
20.0%
|
|
Fidelity
|
4.0%
|
14.0%
|
24.5%
|
|
Homeowners'
|
4.5%
|
14.0%
|
22.5%
|
|
Inland Marine
|
7.5%
|
15.7%
|
25.3%
|
|
Machinery
|
10.0%
|
16.6%
|
29.0%
|
|
Ocean Marine
|
6.5%
|
14.5%
|
24.9%
|
|
Surety
|
2.3%
|
19.5%
|
41.1%
|
|
Trade Credit
|
10.0%
|
15.0%
|
21.7%
|
|
Workers' Compensation
|
3.4%
|
12.8%
|
25.3%
|
|
Total
|
5.3%
|
14.7%
|
26.1%
|
Discussion
On average, across insurance lines, producers receive a commission of 14.7% of the premiums they bring in. However, the levels and spread between the minimum and maximum vary by insurance line. Surety insurance, for example, pays 19.5% on average, and has a wide range spread of 2.3% to 41.1%. Personal Auto insurance, meanwhile, pays 14.0% on average and has a relatively smaller range spread of 6.3% to 25.3%.
The differences in commission levels and range spreads between insurance lines may be driven by a few factors, including:
- Profitability and/or size of each line
- Whether a line is more niche or specialized
- Characteristics of the producers themselves (i.e., experience, expertise, book of business, etc.).
Other Areas of Consideration
When building a commission structure, consideration may be given to the following:
- New vs. Existing Clients: Different commission amounts may apply to new accounts vs. existing ones to influence whether producers focus on client growth vs. retention.
- Commissions and Book Sizes: The rate of commissions may increase with the size of a producer’s client book. For example, they may be paid 15% on the first $500k of business and 20% on anything above that level.
- Contingent Compensation: Producers may receive additional compensation contingent on other goals, such as the profitability of their book of business.
Build the Right Commission Structure for Your Company
For insurance companies and professionals thinking about these questions and areas of consideration, one size does not fit all. Every aspect of an incentive plan should reflect the unique characteristics of the company, employees, and strategic plan.
Our consultants can work with you to build a commission structure for your producers, align incentives with business strategy, and drive sales success. Get in touch.
