What are generally based on a percentage of the premium written?

Question

Options

• AUnderwriting pools
• BRegular commissions
• Creinsurance premiums
• DStatement commissions

• A
  11% (3)
• B
  82% (23)
• C
  4% (1)
• D
  4% (1)

Explanation

Regular commissions (B) are calculated as a percentage of the premium written - meaning the agent or broker earns a set percentage of the total premium the insurer collects on each policy they sell. This is the standard compensation structure in insurance distribution.

Why the others are wrong:

• Underwriting pools (A) are risk-sharing arrangements between insurers, not a compensation mechanism tied to premium percentages.
• Reinsurance premiums (C) are what a ceding insurer pays to a reinsurer to transfer risk - they are costs, not commissions, and are calculated based on the reinsurance agreement terms.
• Statement commissions (D) is not a standard insurance term - it's a distractor designed to sound plausible.

Memory tip: Think "commission = cut of the action." An agent's regular commission is literally their slice of the premium pie - the bigger the premium written, the bigger their paycheck. The word regular signals this is the baseline, percentage-based pay structure, not a special arrangement.

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