Extra compensation a carrier pays an agency for meeting volume, growth or loss-ratio (profitability) targets over a period.
Contingency / Profit-Sharing Commission
Extra compensation a carrier pays an agency for meeting volume, growth or loss-ratio (profitability) targets over a period.
A contingency or profit-sharing commission is bonus income beyond standard commission, paid by a carrier when the agency\'s book with that carrier hits certain targets. It is typically calculated annually.
Qualification usually depends on some mix of:
- Volume / premium written with the carrier,
- Growth over the prior year, and
- Loss ratio — how profitable the agency\'s book was for the carrier.
Because a low loss ratio is often the biggest driver, contingency income rewards agencies that place profitable, well-underwritten business. These payments can be a meaningful share of an agency\'s profit but are variable and not guaranteed, so agencies monitor loss ratios by carrier throughout the year.