Home and auto carry different carrier rates, and renewals pay less than new business. See exactly what makes up each side, and when the producer flips to profit.
Assumptions
Producers earn nothing on renewals — those stay with the agency.
Carrier commission to agency
Producer production
6-month policies (renew every 6 mo).
12-month policies (renew every 12 mo).
Monthly breakeven premium
Becomes a profit center
This month's standing
18-Month Ramp — Agency Earns vs. Producer Costs
The producer flips to a profit center the month the agency commission line crosses above the producer cost line.
Anatomy of a Single Month — What Makes Up Each Side
Month
Agency commission earned
Total agency earns
Producer cost
Total producer cost
How the Agency's Commission Mix Shifts (New Business → Renewals)
Early on, the agency's commission is all new business. As the book renews, the renewal bands grow — that retained, lower-rate income is what carries the producer into profit.