Agent / Broker Commission Expense
Recording commissions paid to insurance agents and brokers for new and renewal business.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Agent Commission Expense (Gross) | Expense (+) | 60,000.00 | - |
| Commissions Payable | Liability (+) | - | 60,000.00 |
💡 Accountant's Note
Commissions are typically 10-25% of written premium depending on the line of business. Motor and health commissions are lower; liability and specialty lines are higher. Renewal commissions are typically lower than new business.
Practitioner & Systems Framework
💻 ERP Architecture
Agent and broker commissions are calculated automatically by the policy admin system based on the commission rate configured for each agent/product combination. The commission payable is generated at policy issuance and cleared when payment is made to the agent. Some systems allow for instalment commission (paid as premium instalments are received) versus upfront commission. The commission payable sub-ledger must be maintained by agent to support the payment run and reconciliation.
⚠️ Audit Flags
Auditors verify that commission rates are within the regulatory maximum permitted rates (Jordan IRC sets maximum commission rates by line of business). Test that commission is calculated on the net premium (after applicable taxes and fees), not the gross amount collected. Review the commissions payable aging for any disputed or unclaimed commissions. Confirm that commission expense is correctly classified as an acquisition cost and that any portion qualifying as incremental is treated as DAC under IFRS 17.
📄 Required Documentation
Signed agency or brokerage agreement specifying commission rates, commission calculation report from the policy admin system, commissions payable aging schedule, payment run confirmation, and IRC maximum commission rate schedule for compliance confirmation.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.