Commission reconciliation means checking that the commission each insurer paid matches the commission your agency expected. Done every month, it takes an afternoon. Left for a year, it turns into an investigation.
Use this checklist each month, for each insurer.
Before you start
- The insurer’s commission statement for the period
- Your record of policies written, renewed, adjusted or cancelled with that insurer in the same period
- The agreed commission rates for each line of business
- The bank deposits that match the statement
The checklist
1. Match the statement to the bank
- Does the statement total equal the amount deposited?
- If not, is the difference explained by a fee, an offset or a payment that’s still pending?
2. Match each line to a policy
- Does every line on the statement match a policy in your records?
- Does every policy you wrote or renewed this period appear on the statement?
- List anything that appears on only one side. These are your exceptions.
3. Check the amounts
- Is the premium on the statement the premium you have on record?
- Is the rate applied the agreed rate for that line and that type of business (new or renewal)?
- Recalculate a sample by hand, especially any line that looks unusually high or low.
4. Check adjustments and cancellations
- Have mid-term adjustments been credited or charged back correctly?
- Does every clawback match a cancellation you know about?
- Are any items from last month that should have been corrected still missing?
5. Record and chase the exceptions
- Log each exception with the policy, the amount, what you expected, and what you received.
- Send the insurer one query that lists all of that period’s exceptions, not one email per item.
- Carry open items forward, and check them first next month.
The most common mismatches
| What you see | Usual cause |
|---|---|
| Policy missing from the statement | Timing: the insurer booked it in the next period |
| Commission lower than expected | New-business rate applied to a renewal, or the reverse |
| Unexpected negative line | A clawback for a cancellation your records don’t show yet |
| Premium differs | A mid-term adjustment recorded on only one side |
| Line you can’t identify | Wrong policy number, or business placed by someone else |
Keeping it manageable
- Do it monthly. Insurers fix recent items far more easily than old ones.
- One owner per insurer. The same person learns that insurer’s statement format and its usual errors.
- Keep an exceptions log. A running list of open items with dates shows which insurers cause the most rework.
- Record expected commission when the policy is written. Reconciliation is fast when the expected figure already exists.