First Year Commission

Definition - What does First Year Commission mean?

A first year commission is the fee an insurance company pays an agent for selling a new policy. This payment is a percentage of the first year of premiums the policyholder pays on the new policy.

Insuranceopedia explains First Year Commission

First year commissions are an alternative to renewal commissions, which are commissions paid after the first year commissions are paid. So a renewal commission would be made for the second and subsequent years of the policy.

The figures paid out for first year commissions help an insurance company determine the amount of business an agent brings in, while renewal commissions help them see how much of the clients the agent brought in are retained.

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