What causes protection insurance clawback?
Clawback is the cost of policies that do not stay on the books. It is driven by persistency, and persistency is driven by what happens after the sale.
How clawback works
Most protection commission is paid upfront on an indemnity basis. The insurer advances commission on the assumption that the policy will stay in force for an earnings period set out in its terms of business. If the policy is cancelled or lapses within that period, the unearned portion is reclaimed from the distributor. The earlier the lapse, the larger the reclaim.
Why it is a business cost, not a sales statistic
Clawback arrives every month, regardless of how many new policies were sold. A broker with a cancellation rate of 20% over the earnings period is, in effect, refunding a fifth of the commission it booked. Even a strong, well-run business carries a clawback bill. The question is how much of it is avoidable.
The main drivers
Clawback follows lapses, so its causes are the causes of cancellation: affordability, failed payments, poor understanding of the cover, replacement by competitors and disengagement after the sale. Quality of advice and lead source matter too. Business written quickly, under pressure or from low-intent leads tends to lapse faster.
Measuring it properly
Track clawback by month of sale rather than month of reclaim, so you can see which cohorts are underperforming. Break it down by product, adviser, lead source and lapse reason. Look separately at very early lapses, which usually point to issues at or just after the sale, and later lapses, which point to affordability or disengagement.
What reduces it
The most effective steps sit in the first months after the sale: confirming the customer received and understood their documents, checking their details and existing cover, acting quickly on failed payments, and keeping the value of the policy visible. Each of these can be done by phone, but phoning every customer is costly and many people prefer not to be called unexpectedly.
An illustration
On the Adviser.ai homepage calculator we illustrate a distributor writing 5,000 policies a year at £1,000 average commission, with a 20% cancellation rate before using Adviser.ai. If post-sale check completion rises from 40% to 70%, and completed checks carry the lower cancellation rate we observe in our data, the overall rate falls to around 15%. The exact figures will differ by firm. The point is that a modest change in post-sale engagement can move a large cost.
Doing it without adding headcount
Automated post-sale journeys reach every customer in a consistent way and bring the ones with issues to the attention of the right team. Across our platform, delivering this kind of engagement digitally can cost up to 14 times less than doing the same work by phone.
Early lapses cost the most
Because clawback usually reduces as the policy ages through the earnings period, a lapse in the first few months reclaims far more commission than one near the end. That makes the first weeks after a sale disproportionately important. Problems in the handover, such as missing documents, incorrect details or a replaced policy left running, are among the most common causes of very early cancellations, and among the easiest to fix if they are found.
Reading the clawback bill
A monthly clawback figure mixes policies sold across many previous months. Without breaking it down, a firm cannot tell whether things are improving. Mapping each reclaim back to its month of sale, product, adviser and lead source shows which cohorts are driving the cost and whether recent changes are working. It also makes it easier to forecast clawback for the months ahead.
Where the commercial value lies
For most distributors, reducing clawback by a few percentage points is worth more than a similar increase in new business, because the commission has already been earned and the acquisition cost already spent. Retention activity also tends to be cheaper than acquisition, particularly when it is automated, and it improves customer outcomes at the same time.
Lead source and clawback
Not all new business carries the same risk. Policies sold quickly to customers who were not actively looking for cover, or sourced from low-intent leads, tend to lapse faster than those from referrals, existing customers or customers who asked for advice. Measuring clawback by lead source often changes how a firm values its marketing spend, because a cheaper lead that lapses early can cost more overall than a more expensive lead that stays.
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Adviser.ai figures are drawn from anonymised client data and are illustrative. Results vary by firm, product and implementation.
Last updated 27 October 2026