When & How is Commission paid?
Commission is paid on the 21st of each month via BACS to each Network or Agency and is paid a month in arrears e.g. if a policy is in force in January, commission will be paid in February. If you're on a monthly Free Start Drip, commission will be paid monthly throughout the term of the policy. The amount received is dependent on the premium collected in the month.
For Mortgage Protection, Income Protection and Classic Products: if the policy is in force in the last 8 days of the month, commission is then paid two months in arrears.
Commission Statements:
Commission statements will be emailed to you (your agency). Please note that you cannot view your commissions statements or payments in Adviser Hub.
We no longer post commission statements.
Emailed Statements also go out on a monthly basis, approximately on the 18th.
Discussing Commissions:
We can only discuss commissions with those who are authorised. If you'd like to discuss commission amounts and rates, please follow the steps below:
DA:
If you're directly authorised (DA) with the FCA and have a directly authorised agency with us, we can discuss commission rates and amounts, but only with authorised personnel.
AR:
If we pay commissions directly to you, you must be able to confirm the sort code and account number of the bank account that the commission is being paid into.
Network:
If we pay commission directly to your Network, we're unable to discuss commissions with anyone else other than the Network.
Remember: You can also use the Commission Calculator located at the bottom of the Home dashboard in Adviser Hub to work out commission rates.
How do we calculate commission?
Whilst working out your commission rates, you'll need to include the relevant rate of IPT (Insurance Premium Tax). Please refer to the FAQs on IPT for full details of this.
The Policy Admin Fee (PAF) increased from £36 to £42 on 1st May 2025. Existing policies will have their PAF increased on their renewal.
Monthly Drip/Accrual:
Commission is paid monthly throughout the term of the policy.
Calculation: Monthly Premium (minus admin charge)/ IPT at the current rate x commission rate. Please note that it is no longer possible to change your commission to Monthly Drip.
Client Pays Premium in Full:
£350 (Premium) - £42 (Subtract Admin Fee) / (Divide) 1.12 IPT (Insurance Premium Tax) x 27.5% (Commission Rate) = £77.10 (Commission) / (Divide) 12 = £6.42 (Monthly commission Due)
Client Pays Premium by Monthly Direct Debit:
When a client pays by Monthly Direct Debit there is a 12% charge for credit. Commission is not paid on the charge for credit so this needs to be removed before calculating the commission amount. You can find the Charge for Credit on the Premium Breakdown in Advisor Hub.
£350 (Total Premium inc IPT and admin charge) x 12% (Charge for Credit) = £392
£392 (Total Amount Payable) – £42 (Charge of Credit) - £42 (Subtract Admin Fee) / (Divide) 1.12 IPT (Insurance Premium Tax) x 27.5% (Commission Rate) = £77.10 (Commission) / (Divide) 12 = £6.42 (Monthly commission Due)
Annualized Indemnity:
12 months commission paid upfront at the inception of the policy and at renewal each year after.
Client Pays Premium in Full:
£350 (Premium) - £42 (Subtract Admin Fee) / (Divide) 1.12 IPT (Insurance Premium Tax) x 27.5% (Commission Rate) = £77.10 (Commission Due)
Client Pays Premium by Monthly Direct Debit:
When a client pays by Monthly Direct Debit there is a 12% charge for credit. Commission is not paid on the charge for credit so this needs to be removed before calculating the commission amount. You can find the Charge for Credit on the Premium Breakdown in Advisor Hub.
£350 (Total Premium inc IPT and admin charge) x 12% (Charge of Credit) = £392
£392 (Total Amount Payable) – £42 (Charge of Credit) - £42 (Subtract Admin Fee) / (Divide) 1.12 IPT (Insurance Premium Tax) x 27.5% (Commission Rate) = £77.10 (Commission Due)
Double Indemnity:
Two years’ commission is paid to the broker from the insurance start date of a policy discounted by 90.91%. In the third year of the policy at renewal, this will revert to an Annual Indemnity.
Client Pays Premium in Full (Start of policy):
£350 (Premium) - £42 (Subtract Admin Fee) / (Divide) 1.12 IPT (Insurance Premium Tax) x 27.5% (Commission Rate) x 2 (Number of Years commission payable) * 90.91% (Discount Factor) = £140.18 (Commission Due)
Client Pays Premium by Monthly Direct Debit (Start of policy):
When a client pays by Monthly Direct Debit there is a 12% charge for credit. Commission is not paid on the charge for credit so this needs to be removed before calculating the commission amount. You can find the Charge for Credit on the Premium Breakdown in Advisor Hub.
£350 (Total Premium inc IPT and admin charge) x 12% (Charge of Credit) = £392
£392 (Total Amount Payable) – £42 (Charge of Credit) - £42 (Subtract Admin Fee) / (Divide) 1.12 IPT (Insurance Premium Tax) x 27.5% (Commission Rate) x 2 (Number of Years commission payable) x 90.91% (Discount Factor) = £140.18 (Commission Due)
Commission reverts to Annualised Indemnity from Year 3 onwards.
Enhanced Indemnity:
If an agency is paid standard commission rate at 27.5%, Enhanced Indemnity will pay commission at 45% in year 1 and 15% upon each yearly renewal. The first year’s payment has a Claw back liability period over 2 years.
Client Pays Premium in Full (Start of policy):
£350 (Premium) - £42 (Subtract Admin Fee) / (Divide) 1.12 IPT (Insurance Premium Tax) x 45% (Commission Rate) = £126.16 (Commission Due)
Client Pays Premium by Monthly Direct Debit (Start of policy):
When a client pays by Monthly Direct Debit there is a 12% charge for credit. Commission is not paid on the charge for credit so this needs to be removed before calculating the commission amount. You can find the Charge for Credit on the Premium Breakdown in Advisor Hub.
£350 (Total Premium inc IPT and admin charge) x 12% (Charge of Credit) = £392
£392 (Total Amount Payable) – £42 (Charge of Credit) - £42 (Subtract Admin Fee) / (Divide) 1.12 IPT (Insurance Premium Tax) x 45% (Commission Rate) = £126.16 (Commission Due)
Commission 45% in first year then 15% each renewal thereafter.
5.Creditor policies- non-commissionable element calculation
For Paymentshield Mortgage Protection (MPPI) policies, there is an element of the premium that we do not pay commission on.
The FCA’s PROD (Product Oversight and Governance) rules on remuneration and fair value are linked by regulatory requirements for firms to ensure that the remuneration paid within a distribution chain does not negatively impact on the fair value of a product for the customer. This means that all parties within the distribution chain must understand how their remuneration affects the product's value and assess whether the total cost is reasonable compared to the benefits received.
If an adviser wants to calculate the amount of commission earned, then they can do so by doing the following:
· Take the customer's monthly premium and multiply by 12 to get the annual premium
· Multiply the annual premium by 1.12 to remove IPT
· Remove non-commissionable element: Minus £36
· Calculate the commissionable premium by multiplying the resulting figure by 0.87765
· Then multiply by the broker commission % to calculate the broker commission
Please find a worked example of this where the customer's monthly premium is £105.10 and the broker commission is 27.5%:
· Monthly premium of 105.10 x 12 = 1261.20
· 1261.20 / 1.12 = 1126.07
· 1126.07 - 36 =1090.07
· 1090.07 x 0.87765 = 956.70 (commissionable premium)
· 956.70 * 0.275 = 263.09 (broker commission)