How much do Insurance Agents earn on my premium? 

This is not a question we typically receive on a daily basis.  When most consumers are researching insurance companies it is often replaced by: “Can you give me an apples to apples quote?” “or “What is the cost of my insurance?”

We understand that price does matter and it does effect the type of policy you are able to purchase.   Also, depending on a different insurance companies actuaries, the cost of the exact same risk can vary widely from one company to another; however, the percentage your insurance agency makes in commission on your premium is relatively standard. The value your agent brings can be a differentiator that is often overlooked in the insurance buying decision.  I will do my best to explain commission structure for most personal and commercial property & casualty insurance companies.


How do Insurance Companies earn profit?

When your insurance carrier sets the rates for all of their policyholders each year, they are doing so with the intent to break even.  Their profit is earned from investing your premium dollars during the policy term.  The premium volume falls into 3 categories: claims, company expenses & commission:

Claims:  Claims typically amount for 55-65% of the insurance companies combined ratio.  A good rule of thumb is if your claims paid are under 50% of the premium dollars you have paid, you are making money for the insurance company and they should be happy with you.

Insurance Company Expenses:  This typically accounts for 25-35%  of their combined ratio – This includes reinsurance, payroll, advertising, & other operating expenses.  Direct & online companies without agents will replace that expense with ballooned advertising budgets, celebrity endorsements and animators.

Agency Commission:  Agency commissions range from 5-15% of your premium.  Many insurance companies also have contingent commissions programs that could pay the agency an additional amount at the end of a policy year based on profitability, growth & retention.  Typically, this accounts for under 1% of the premium – if earned at all.

So what can I expect to receive for the money I am paying to use an independent insurance agency?

Each independent agency varies in their ability to provide you with a scope of services.  At UIS Insurance we feel that a combination of local touch and large agency resources is the right balance.


Matt Hull, CIC is a Senior Account Executive in the UIS Findlay office. He is the current sales manager, and is a minority owner in UIS Insurance & Investments.

You can contact him at

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