What is a contract level in insurance?
Your contract level is the commission percentage a carrier pays you on a product, expressed as a percentage of the target premium — 70%, 90%, 115% and so on. It is set by whoever you contract through, and the gap between your level and the level above you is where an override comes from.
Levels are the pricing mechanism of the whole distribution layer. A carrier makes a total commission available on a product; every party between the carrier and the writing agent holds a level, and each keeps the difference between theirs and the one below.
Which means a higher level is not automatically a better deal. The spread an upline keeps is what funds leads, training, case support, contracting help and technology. A top-level contract with no support behind it can pay a producer less in practice than a lower one that comes with lead flow.
Levels are also not permanent. They commonly move with production, and asking what triggers an increase — and getting the answer in writing — is a more useful conversation than negotiating the starting number.
| Carrier makes available | 120% |
|---|---|
| IMO holds | 115% |
| Your agency writes at | 85% |
| Producer writes at | 70% |
| Agency's override on that sale | 15 points |
Illustrative only. Levels vary widely by carrier, product and organisation.
Longer read: /blog/imo-vs-fmo-vs-bga