Beyond Premium Volume: An Insurance Broker's Guide to True Carrier Profitability

Case Study: ABC Insurance Brokerage
Revenue: $2.5M annually
Carriers: 12 major relationships
Challenge: Unknown carrier profitability

Monday Morning Meeting:
"Which carrier brings us the most profit?"

Silence

"What's our collection rate on direct bill commissions?"

More silence

"Are we missing any carrier payments?"
Uncomfortable shifting in seats

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The Hidden Revenue Story

Before Analytics:

Carrier A: "One of our top partners"

After Analytics:

• Written Premium: $1.2M
• Commission Rate: 12%
• Expected Commission: $144,000
• Actual Received: $138,000
• Missing Revenue: $6,000

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The Automate Accounts Solution

I) Net Agency Premium Analysis by Carrier:

• Premium volume tracking: Real-time monitoring of written premiums across all carriers, with automated trend analysis comparing current volumes against historical data and targets. The system automatically flags significant variations in premium volume, helping identify carrier relationships that need attention or present growth opportunities.

• Commission rate monitoring: Continuous tracking of base commission rates, bonus structures, and special incentives for each carrier, with automated alerts for rate changes or bonus threshold achievements. The system maintains a detailed history of rate negotiations and changes, helping build stronger cases for future commission discussions.

• Payment schedule tracking: Advanced monitoring of carrier payment schedules against actual receipt dates, with automated reconciliation of expected versus received amounts. The system generates proactive alerts for upcoming payments and flags any deviations from standard payment patterns, ensuring no commission payment goes unnoticed.

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Real Example:

Carrier B - Q1 2024
• Written Premium: $500,000
• Standard Commission: 15%
• Bonus Commission: 2%
• Actual Received: $85,000
Result: $2,000 in unclaimed bonus commissions

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II)  Direct Bill Commission Tracking

- Policy Level:

• Commission calculation verification: Automated verification of commission calculations for each policy against carrier agreements and rate sheets, with built-in logic to handle complex scenarios like multi-policy discounts and bonus structures.

• Payment receipt monitoring: Real-time tracking of commission payments at the individual policy level, with automated matching between expected and received amounts, ensuring every earned commission dollar is collected.

• Discrepancy flagging: Smart detection system that automatically identifies and alerts on any variations between expected and received commissions, including partial payments, incorrect rates, or missing bonus commissions.

• Historical trend analysis: Comprehensive analysis of policy-level commission patterns over time, helping identify seasonal variations, rate changes, and opportunities for commission optimization.

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- Carrier Level:

• Aggregate commission analysis: Holistic view of commission earnings across all policies with a carrier, including base commissions, bonuses, and special incentives, with automated calculation of effective commission rates.

• Performance benchmarking: Comparative analysis of carrier commission structures and payment performance against industry standards and your brokerage's other carrier relationships.

• Payment pattern monitoring: Advanced tracking of carrier payment behaviors, including payment timing, accuracy rates, and processing efficiency, helping identify carriers needing attention or process improvement.

Success Metrics

Client Success Story:
XYZ Brokerage implemented the Automate Accounts system in January 2024

Before Implementation:

• Unknown carrier profitability
• 5% commission leakage
• 45-day average collection time

After 90 Days:

• Complete carrier profitability visibility
• Recovered $15,000 in missing commissions
• Reduced collection time to 30 days
• Identified two carriers for rate negotiation

Ready to maximize your carrier partnerships?

At Automate Accounts, we've helped 100+brokerages optimize their carrier profitability. Book a free consultation or send us an email at hello@automateaccounts.com to analyze your carrier profitability today.

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