Commission logic and reports for insurance brokers

From about 2014 to 2019, we built and ran a platform for Indian insurance brokers. It began as a general insurance platform, became a broker CRM, and later extended to reinsurance. It had a broker and sub-broker hierarchy, policy and claims management, a policyholder login, supervisor reporting, regulatory reports in IRDAI format and reinsurance lead management. That work ended around 2019, so treat this as lessons about structure and not as current regulatory guidance. The worked example below is invented.

The classic mistake is to store a commission amount on a policy. It works until somebody asks why it was that amount. Keep the rule that applied, and keep every movement separately.

Suppose a broker earns 15% on a product and passes 10% to a sub-broker. These figures are made up, and real terms depend on your agreements and on the applicable rules. A premium of 1,000 gives the sub-broker 100 and leaves the broker 50. The questions that follow are where your software earns its cost:

• Mid-term cancellation. The insurer refunds part of the premium. How much commission comes back, and from whom? If the sub-broker has already been paid, is it deducted from their next statement?
• An endorsement. Cover is increased mid-term. Which rate applies to the extra premium: the one at sale or the current one?
• Renewal. Is the renewal rate different? Who earns it if the original sub-broker has left?
• Timing. Do you pay on premium receipt or on insurer payment? Statements must show what is earned and what is paid.

Write your answers down as test cases before any coding. They are also the agreements that your staff and sub-brokers will argue over, so it helps to have them settled.

On our platform, supervisors had their own reporting, and regulatory reports were generated in the required format. Reports like these shouldn’t be left to the end of the project, since they reveal which data you have to capture at the moment of sale. If a regulator or an insurer asks for a figure by a particular date or category and you didn’t store it, no report can recover it. Start from the current templates, from your current regulator, and work back to your data model. Keep a record of how each submitted report was produced, so you can reproduce it when asked.

Commission rarely stands alone. Policyholders need a login to see policies and raise claims. Claims need a path from intake to settlement. Document-heavy workflows need review steps, and access to all of it should be limited by role and recorded. If you are weighing up custom work, the method in our build-or-buy guide transfers well: test any product with your worst real case. And if your commissions run across several levels of referral rather than brokers, see multi-level referral commissions.