In the insurance industry, commission is usually set as being a percentage of a base value (sum insured, premium, and so on), that might amount to a substantial sum, depending on the type of business involved. This means that the commission can also be relatively high. If the calculation procedure applies different criteria from the commission disbursement rules, a limit is usually agreed. This limit can be an absolute amount, or a percentage of another base value. Other reasons can also play a role:

• The liability amount for a single incident (cancellation case) is relatively high
• A commission partner might go into retirement after conclusion of one (or very few) insurance policy/policies.

Forms of ceiling amount: Initially the limit can refer to a single commission contract partner within a commission case, or to the whole commission case (with the exception of some types of indirect participant).

In Germany, the ruling of the Federal Supervisory Office for Insurance Associations (BAV) is that commission in the life insurance line of business is limited to 50% of the annual premium. This ceiling amount rule applies both to new business and also to changes to the total commission paid out to direct participants.

Life insurance companies have also reached agreement that commission must not exceed 90% of the premiums paid plus cash surrender value. This rule must be applied in the case of cancellations, regardless of whether the cancellation liability period for the insurance policy is still ongoing, or has already passed. It is therefore a type of cancellation liability. Certain cases (such as the death of the policyholder) can be excluded from this liability. This ceiling amount form also refers to the total commission paid to direct participants in a commission case. For further details, see Liability Agreement.

Some insurance companies have a number of further ceiling amount forms, ranging from individually agreed ceiling amounts (or percentages) to intensification of the variants described above. Rules for determining the base amount with a percentage share ceiling amount can depend on various criteria (line of business, product, and so on).

As well as maximum amounts in a commission case, there are also cases in which a minimum commission is agreed, but this is not so common. As long as minimum commission does not refer to a single commission contract partner, but to the commission case (possibly with several direct participants), this possibility is covered in the ceiling amount agreement.

Remuneration-related ceiling amount: If ceiling or threshold amounts are to apply to remuneration for a commission contract partner, such provisions can be set down in the remuneration ruling for groups of commission contract partners. Individual limits are not stored in version 1.0 of the commission contract.

Implementing specialist requirements: Application of a ceiling amount is a special case in remuneration clearing. A set (usually of positive remunerations) is limited by a fixed amount, or by an amount that is determined by a rule. A remuneration clearing rule as part of a remuneration clearing agreement is the solution.