INSURANCE DISTRIBUTION
Commission definition
Commission is remuneration paid by an insurer or reinsurer to an intermediary for selling, placing or handling insurance business.
In practice, this means remuneration paid by an insurer or reinsurer to an intermediary for selling and handling its policies and bringing it business. The amount of the intermediary’s commission is usually factored into the premium charged by the insurer or reinsurer for the cover. This gives insurers, brokers, reinsurers and risk managers a shared way to discuss the concept when reviewing policies, claims, regulation or market data.
This term is especially useful in insurance distribution, broking and delegated authority arrangements. It helps users interpret insurance terminology consistently across markets, policies and risk data. It also helps users compare how insurance is structured, regulated, priced or claimed across different markets.
Commission is closely related to brokerage, broker, agent and acquisition costs. Linking these concepts together helps build a clearer glossary structure and gives readers a stronger understanding of how individual insurance terms connect within wider international insurance practice.
At a glance
- Used in
- Insurance distribution, broking and delegated authority arrangements.
- Purpose
- Helps users interpret insurance terminology consistently across markets, policies and risk data.
- Important because
- Clear definitions support better comparison of insurance products, market practices and regulatory requirements across jurisdictions.
- Related terms
- brokerage, broker, agent and acquisition costs.
Example of commission in insurance distribution
A broker places a policy with an insurer and receives a percentage of the premium as commission. The commission is part of the distribution cost of the insurance.