If a rising tide lifts all boats, then commissions are being lifted by an increase in premiums and considerations.
In 2004, the top 50 companies as ranked by total commissions paid saw a 13% growth in commissions to $23 billion from $20.3 billion in 2003, according to data from the National Association of Insurance Commissioners Annual Statement Database via National Underwriter Insurance Data Services/Highline Data.
Individual ordinary life insurance commissions increased 10% to $6.9 billion from $6.2 billion, and individual ordinary annuities commissions rose 23% to $8.3 billion from $6.7 billion in 2003.
The increase should be examined in the context of an increase in premiums, the mix of products being sold and whether commissions are first-year or renewal premiums, according to Jim Renz, director-accounting policy, with the American Council of Life Insurers, Washington.
“What it is least likely attributable to is an increase in commission rates,” he says.
In a separate look at premiums, the ACLI tallied the top 50 companies just by premium and found that life premiums increased 21% in 2004 over 2003 and annuity premiums were up 18% for that same time frame.
Indeed, for those top 50 companies in the NU data run, total premium growth increased 16% to $324.2 billion from $279.3 billion.
First-year premiums for these companies grew 9% and renewal premiums, 8% in 2004 over 2003, the NU data showed.
Several companies with large changes in their commission totals detailed reasons for those changes.
ING USA Annuity and Life Insurance Company, Des Moines, Iowa, merged a number of legal company entities into one company, says spokeswoman Christina Divigard, and as a result commissions rose.