Unearned commission

Definition

Commission the agency hands back when a financed policy is canceled for nonpayment.

Why It Matters

Retention counts the premium that returns at the anniversary, so it cannot see a policy that dies in month four, and that is the policy which takes commission back out. Florida writes the agent's side of it into statute: within fifteen days of the finance company's notice the agent returns the unearned commission to the insured, or applies it to other coverage with the insured's written approval. An agency that finances premiums for its commercial clients therefore carries a return liability sized by its financed book, appearing in no schedule of debt, because the money was earned and spent in the month the policy was written. Ask for the financed share by carrier and pull twelve months of cancellation notices, because the count of them is the run rate. Washington's premium finance statute stops at the insurer and the finance company and never reaches the agent, so how many states carry the agent-level sentence is unread.