Blog · Finance metrics and formulas · Insurance
Separate placed premium from agency commission and fee income. A worked example shows why premium growth can hide falling revenue.
A producer can place more premium while earning less agency income if the book shifts to lower-commission lines. An agency dashboard that labels premium as revenue can therefore celebrate growth that finance does not see. Preserve both measures and explain the link through commission terms and fees.
One row represents: one policy-term financial summary, with commission and fees drawn from their own reconciled records.
Useful fields: Policy term ID, client ID, line, carrier, signed premium, commission income, agency fee, income period, transaction type and currency.
Sum premium once at the agreed term or transaction level. Sum agency income from the commission and fee ledger, excluding carrier premium collected on behalf of others. State whether commission is booked, earned, received or estimated. For comparisons, keep the population and timing basis consistent and show changes in the income-to-premium ratio.
The following records and amounts are invented to show the method. They are not customer results, industry benchmarks or a forecast of Covirage performance.
| Period | Placed premium | Agency income |
|---|---|---|
| Prior year | $1,000,000 | $150,000 commission + $10,000 fees |
| Current year | $1,100,000 | $132,000 commission + $10,000 fees |
Premium grows 10%, but agency income falls from $160,000 to $142,000, a decrease of 11.25%. Commission as a share of premium falls from 15% to 12%. This example could reflect a different line mix or contract terms; it does not prove that any carrier reduced its rate.
This is a management-reporting distinction, not a prescription for financial-statement recognition. Premium measures such as written and earned premium also have different meanings. Use the agency's approved accounting definitions for statutory or audited reporting.
Bring a small, authorized sample to Covirage for insurance agencies and brokers. Use the sample to discuss the fields and views your business needs. A dashboard or AI analyst can help explore this question when the required data and definitions are available; missing records still need to be resolved.
Upload sample data to check its structure. Keep unnecessary personal, claims and policyholder details out of an initial sample. The sample check does not establish that every analysis in this guide is available automatically.
These references provide terminology or governance background. The worked example and proposed review method above are original illustrations, not prescribed industry standards.
It should not be labeled agency revenue. Report placed premium separately from the agency's commission and fee income using approved definitions.