Fintech · Insurtech
Broker commissions were flat across very different loss ratios.
This marketing & margin audit surfaced $72k in recurring annual margin in a Fintech business, evidenced, senior reviewed, and delivered in 7 days.
The business
An insurtech distributed products through brokers, paying commission at a flat rate across its range. The products differed sharply in their underlying economics, loss ratios, servicing cost and retention, but because the commission structure was uniform and volume was growing, the way a single rate interacted with very different product margins was never analyzed.
What triggered the audit
Portfolio margin varied more than a flat commission and steady volume could explain, pointing at product mix rather than distribution cost. The audit analyzed commission against each product’s true margin and loss ratio, testing whether one rate made sense across products with fundamentally different economics.
What the audit found
A single commission rate across very different products was quietly distorting the portfolio. High margin, low loss ratio products could comfortably carry the flat commission, but low margin products with worse loss ratios were being sold at the same rate, so on those lines the commission consumed a disproportionate share of already thin margin, and in the worst cases pushed them toward unprofitability. Because brokers, rationally, pushed whatever was easiest to sell rather than what was most profitable for the insurer, the flat rate actively encouraged the wrong mix. Since commission was uniform and volume grew, the margin distortion stayed hidden. Realigning commission to product economics was worth roughly $72k a year in portfolio margin.
What we changed
Set commission by product margin band rather than a single flat rate, so distribution cost finally reflects each product’s real underlying economics.
Reduced commission on the low margin, high loss ratio lines that simply couldn’t sustain the flat rate without turning unprofitable.
Aligned broker incentives with the products that are genuinely profitable for the insurer, correcting the mix the flat rate had encouraged.
Made portfolio margin by product a monitored metric, so a damaging product mix can’t quietly rebuild under a uniform commission again.
The result
The published chart shows portfolio margin across the product mix rising from 11% to 17%, a 6 percentage point increase. The panel describes commission rates adjusted for product risk and loss ratios, but it does not publish the portfolio mix or the risk adjustment calculation. $72k a year of portfolio margin recovered by matching commission to product economics rather than one flat rate, an annual figure equal to 12× the $5,950 Audit + Sprint fee. For any insurer or distributor, the uniform rate is the trap: it lets thin margin, high loss products carry the same commission as profitable ones, and quietly steers brokers toward the wrong mix. If you pay one commission across very different products, some may be unprofitable to sell. A fixed fee audit realigns it in days.
From kickoff to signed off findings: 7 days.
What the client said
$72k a year found in 7 days
Portfolio margin across the product mix: 11% → 17%
“One flat commission across very different products steered brokers to the wrong mix. David set commission against each product's margin and loss ratio; thin lines were being sold near unprofitable. Commission now follows the margin band.”
David JacksonSenior Auditor · signed this audit off