What does as-earned commission mean?
As-earned means you are paid commission as each premium payment is actually collected, rather than advanced up front. A monthly policy pays you monthly. It is slower to ramp and almost eliminates chargeback exposure, because you are never holding money the carrier has not yet collected.
As-earned is the conservative half of the advance decision. You give up front-loaded cash flow and receive, in exchange, a commission statement that cannot surprise you — nothing can be reclaimed, because nothing was paid before it was earned.
It suits established producers with a book already generating renewals, and it suits agencies that would rather not manage advance balances across a team. It suits a brand-new commission-only producer badly, which is exactly why advances exist.
Many carriers let you choose, and some let you choose per product. It is worth asking rather than accepting whatever the default is.
| Annualized premium, paid monthly | $1,200 |
|---|---|
| First-year commission at 90% | $1,080 |
| Advanced: paid now | $810 |
| As-earned: paid per month | $90 |
| As-earned chargeback exposure | $0 |
Illustrative. The trade is cash flow now against certainty later.
Longer read: /blog/insurance-commission-advances-chargebacks