Understanding Commission Ratio
How we calculate. Commission % = commissions ÷ written premium × 100. The form uses the same arithmetic as the worked examples on this page. See our methodology and accuracy policy.
Real-world scenario: A typical Commission Ratio case uses commissions 1200000 and written premium 10000000. Enter the same figures below to reproduce the worked path.
What is Commission Ratio?
An acquisition-cost KPI for agency and carrier distribution. Distinct from the broader underwriting expense ratio.
- Written premium typical denominator
- Same channel/book
- Pairs with expense ratio
The Formula
Worked Example
Common Use Cases
- Distribution cost: agency load
- Channel compare: captive vs independent
- Product pricing: commission assumptions
Pro Tips
- Include contingent bonuses if policy says so
- Watch mid-term endorsements
- Don’t mix earned premium blindly
Limitations: Commission Ratio results are educational insurance and agency planning aids—not underwriting, actuarial, claims, or financial advice. Confirm statutory definitions with your carrier, regulator, and finance teams.
FAQ
Written or earned premium?
Commission ratios commonly use written premium. If you use earned, label the metric clearly.
What if written premium is 0?
Commission ratio is undefined—enter positive written premium.
Authoritative References
For insurance ratio and reporting concepts, consult:
- NAIC — U.S. insurance regulatory resources
- Casualty Actuarial Society — actuarial education resources
- Insurance Information Institute — industry explainers