Premium charge modelling calculator

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rcherrett
Posts: 2
Joined: Wed Dec 20, 2017 6:43 pm

I'm sure something like this has been done before but thought I would share my attempt at a PC calculator/modeller in case useful to anyone.

I pay basic PC but have been wondering what sort of target commission I should be aiming for to set me up best for (hopefully) longer term higher lifetime profits. I've boiled the calculation down to three variables: lifetime gross wins, blended commission rate (i.e. total commission suffered divided by lifetime gross wins), and 'operating margin' (i.e. lifetime gross profits divided by lifetime gross wins).

The x-axis on the graph shows increasing lifetime gross wins, and the y-axis shows the 'lifetime charges margin' - i.e. the cost of all commission and premium charges as a percentage of lifetime gross profits.

There are 5 line graphs, to allow for comparison of different combinations of blended commission rates and operating margins. It seems like the answer for the ideal blended commission rate can vary quite a bit depending upon what your operating margin looks like, and furthermore for the same operating margin, the ideal blended comm rate can also vary as lifetime gross profits increase.

Not really easy to interpret, but has definitely helped me decide to aim for blended commission a little higher than I intuitively thought would be best.

Would be very interested in feedback/comments - obviously there are a few shortcuts in the calculations because it's very hard to fully reflect all the complications of the absurd premium charge calculation!!
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