Month end, commission week
You distribute through brokers, affinity partners and embedded partners. Each has commission terms: a percentage of net premium for one, a flat fee per policy for another, a tiered rate that rises with volume for a third, and different treatment of cancellations for each.
At month end, someone exports policy transactions, filters them by partner, applies the terms in a spreadsheet, subtracts clawbacks for cancellations, and produces a statement. Partners query the numbers. Some statements are late. The accounting system gets a single journal per partner typed by hand. When a partner asks how a figure was calculated, the answer is a formula in a cell.
Why commission is fiddly
The rules are clear in contracts and complicated in practice.
- Each partner has different rates, bases and tiers.
- Cancellations and refunds trigger clawbacks with different rules per partner.
- Mid-term adjustments change premium and therefore commission.
- Tiers depend on volume across a period, which changes as the month goes on.
- Terms change over time, and old policies may be on old terms.
The cost of spreadsheet commission
Errors in either direction damage partner relationships or cost you money. Partners who cannot check their statements lose trust. Finance spends days each month on calculations that follow fixed rules. When terms change, the spreadsheet is edited, and nobody is sure old policies still use the old terms. Commission also appears in bordereaux, so errors spread.
What commission you pay is set by your agreements. We calculate it according to them.
A commission engine
What we build calculates commission from policy events, using each partner's terms as data.
- Each partner's terms are stored as data: basis, rate, tiers, clawback rules and effective dates, maintained by finance.
- Policy events from your policy system, such as new business, adjustments, renewals and cancellations, are read as they happen.
- Commission is calculated per event using the terms in force for that policy, and tiers are recalculated at period end.
- Clawbacks on cancellation follow each partner's rules and appear as separate lines.
- At month end, a statement for each partner lists every policy and adjustment with its commission.
- Partners can view or download their statement from the broker portal or partner dashboard.
- Approved totals are exported to your accounting system, such as Xero or NetSuite, and payment files can be produced for your bank.
| Partner type | Typical terms | Engine handles |
|---|---|---|
| Broker | Percentage of net premium | Per transaction, including adjustments |
| Affinity partner | Flat fee per policy sold | Per new policy, clawback within a set period |
| Embedded partner | Tiered rate by monthly volume | Tier recalculated at month end |
| Any partner | Terms changed during the year | Old policies stay on old terms |
Commission after the change
Take a policy sold through an affinity partner and cancelled a few weeks later. Under that partner's terms the flat fee is clawed back in full inside a set period. The engine sees the cancellation event, finds the original commission line, applies the clawback rule in force on the sale date and adds a negative line to this month's statement with both dates shown. The partner can see exactly why their total is lower, and nobody has to remember the rule.
Tiered partners get the same treatment at period end: the engine totals the volume, applies the tier from their terms and shows the adjustment as its own line rather than silently changing earlier figures.
Commission accrues as policies are written. At month end, statements are ready for review. Partners check their statements line by line and raise specific queries. Finance approves and posts in one step. When terms change, finance adds a new version with a date, and the engine applies it correctly to new and existing policies.
Is commission calculated like this for you?
- Commission is calculated in spreadsheets each month.
- Partners query their statements regularly.
- Clawbacks are worked out by hand.
- Terms changes are handled by editing formulas.
- Commission journals are typed into the accounting system.