Distribution structure

Hierarchy

A hierarchy is the chain of contracts that links an agent up through agencies or marketing organizations to a carrier. It decides who earns what from each sale.

Why it matters

Each level may take part of the commission difference as an override. A short hierarchy often means fewer splits. Carriers record the hierarchy on file, and a change usually needs a form or release. Agents should ask to see their position and the contract levels above and below them. A change in hierarchy can affect pay on future sales and sometimes on renewals, so confirm what moves.

Source: naic.org

Read next, for agentsBuilding an insurance agency: how overrides and downlines work, and what is legal

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