Can You Actually Charge for Advocacy?

Jun 24, 2026

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What Your State Says.

By James W. Moore | InsuranceIndustry.AI Distribution Economics Series: Part 2

Key Takeaways

  • Most states allow producers to charge fees, but “allowed” covers a wide range of conditions, restrictions, and disclosure requirements that vary significantly by jurisdiction.
  • The regulatory framework governing producer compensation was built around the bundled commission model. It was not designed for the kind of unbundling that AI economics is starting to make practical.
  • Advocacy work — claim intervention, coverage dispute escalation, renewal negotiation, contract review support — is already being performed by most commercial agencies. It’s just rarely described or priced separately.
  • Marsh’s compensation structure, a matter of public record since the 2004 Spitzer investigation, demonstrates that formalized fee arrangements alongside commission are legally viable across all 50 states when properly structured and disclosed.
  • Before changing how your agency charges for anything, check your state’s specific rules. Your state agents’ association or department of insurance is the right starting point.
  • The state-by-state information in this article reflects the NAIC PR-70 chart, Fall 2024 edition. State laws change. Verify current rules in your state before acting on anything here.

The previous piece in this series argued that advocacy is the one function inside a standard commission that AI cannot displace, and probably the most valuable thing a commercial agency does. It ended with a caveat: the rules around charging fees in addition to commission vary significantly by state, and agencies should review them before restructuring anything.

This piece examines that caveat, and what it means in practice.

If you haven’t read Part 1, the short version is this: your commission check has always covered four distinct jobs — prospecting, placement, service, and advocacy. AI is driving down the cost of the first three faster than most agency owners realize. The fourth, advocacy, is where the durable value lives. And it’s the one function most agencies have never formally priced.

The short answer to the question in the headline is: yes, in most states, you can charge separately for advisory and advocacy services. The longer answer is that “yes” comes with enough conditions, restrictions, and state-by-state variation that it’s worth understanding the landscape before drawing any conclusions about your own situation.

The Bundle Was Never Designed to Come Apart

Before getting into what the rules say, it’s worth understanding why the rules are complicated in the first place.

The standard agency commission model bundles four distinct functions into a single undisclosed percentage. That structure made sense when one person performed all four functions, at roughly comparable cost, for every account. The carrier paid a percentage of premium, the agent did everything, and nobody needed to negotiate what each piece was worth.

The regulatory framework around producer compensation was built to govern that bundle. Its primary concern wasn’t what producers charged for which services. It was preventing undisclosed dual compensation — making sure clients knew when a producer was being paid by both sides of a transaction, and that premiums weren’t being inflated without the client’s knowledge.

Those are legitimate concerns. But they weren’t written for an environment where the cost of three of the four bundled functions is collapsing. Carriers are already building the tools that compress the retrieval and service layers of the agent relationship — quote lookups, policy summaries, claims intake, customer intelligence — functions that once justified a meaningful share of the commission. State Farm’s May 2026 “Next Gen Good Neighbor” announcement is the clearest recent example: AI-powered agent tools for quote lookups, policy details, and customer intelligence summaries, rolled out by one of the nation’s largest personal lines carriers. The question of what’s left worth pricing separately is becoming more urgent as those tools reach agents’ desktops. The framework doesn’t contemplate that business model. It predates it by decades.

The result is a patchwork of rules that are navigable, but not simple — and that were written for a different era of agency economics entirely.

What Advocacy Actually Looks Like in Practice

Before getting into what states allow, it’s worth being specific about what advocacy work actually is. Most commercial agencies do this work already. They just don’t describe it separately, and they don’t charge for it separately.

Advocacy shows up when a loss run has an error that would spike a renewal and the agent catches it before the client sees the invoice. It’s the coverage interpretation meeting before a large project starts. It’s claim intervention when the adjuster’s reading of the policy doesn’t match what was sold. It’s the carrier negotiation outside a normal renewal workflow, the contract review for a client taking on new risk, the loss recovery coordination after a disputed settlement. None of that is routine service. All of it requires the kind of institutional knowledge of the client’s business that lives in the agent’s head, not in the file.

The work was real; the compensation was embedded. As the cost of the other three functions compresses, that invisibility becomes a business model problem.

What the NAIC Chart Actually Shows

The NAIC maintains a state-by-state summary of producer fee and commission rules under Model Regulation PR-70. The Fall 2024 edition covers all 50 states and the District of Columbia, with citations to applicable statutes and regulations. It’s the clearest single-source map of this territory available.

Reading through all 50 states, the picture is more complicated than a simple yes-or-no answer suggests.

A meaningful number of states — including North Carolina, Tennessee, Mississippi, Oklahoma, Wyoming, and several others — have PR-70 provisions that address only deferred and renewal commissions, not producer fees at all. That’s not a prohibition on fees, but it’s not explicit permission either. In those states, the answer often lives in a separate statute or bulletin that the chart doesn’t capture directly.

States with explicit fee permission tend to attach specific conditions. Written fee agreements are the most common requirement, showing up in Alaska, Connecticut, Idaho, Illinois, Indiana, Minnesota, Missouri, New Jersey, New York, Ohio, Oregon, Pennsylvania, and Washington, among others. The specifics vary: some require the agreement before services are rendered, some require the client’s signature, some require disclosure of whether a commission will also be received.

A few states are notably restrictive. Delaware explicitly prohibits a person from being compensated as both a consultant and a producer on the same transaction. Kentucky states flatly that there is no statutory authority for charging fees beyond the premium. Colorado permits fees only for services entirely separate from the insurance sale itself, with a written disclosure that no insurance product related to those services will be sold through that producer. Texas restricts licensed P&C agents from charging fees beyond commission on the same placement unless the engagement is structured under the state’s separate insurance counselor statutes — a meaningful distinction for any Texas commercial agency considering unbundled fee arrangements.

The personal lines versus commercial lines distinction matters in multiple states. Michigan, New Jersey, Ohio, and Oregon are all more permissive for commercial accounts than personal lines. If your book is primarily commercial, you likely have more room to work with than a personal lines shop in the same state.

Arkansas puts a hard cap on the combined total: fees plus commissions cannot exceed 20 percent of gross premium on any single policy.

It’s also worth noting that in some jurisdictions, charging separately for advisory services may trigger producer, consultant, or disclosure requirements beyond the ordinary commission rules — a layer of complexity the PR-70 chart doesn’t always surface. Your state agents’ association or department of insurance can help translate the statute into current practice, particularly where bulletins or informal guidance postdate the chart.

A Model That Already Exists

The argument that charging separately for advisory or advocacy services is impractical, or legally untenable, runs directly into a counterexample that’s been operating for more than twenty years.

Marsh’s compensation structure became a matter of public record during the 2004 Spitzer investigation into contingent commissions. What that record shows is a formalized, multi-stream compensation model operating across all 50 states: retail commissions, client fees, wholesale broking commissions, insurer consulting compensation, contingent commissions, supplemental commissions, and compensation for administration and other services, all disclosed.

On the specific question of client fees, the Marsh compensation guide is direct: some clients negotiate a fee for Marsh’s services in lieu of, or in addition to, retail commissions. Those fee arrangements are in writing, typically through a Client Service Agreement that specifies the services to be provided, the compensation to be paid, and the terms of the engagement.

The existence of Marsh’s model does not eliminate state restrictions; it demonstrates that fee-plus-commission structures can exist legally when built inside those restrictions. The regulatory framework across all 50 states has been shown in practice to accommodate formalized fee arrangements alongside commission, when they are structured and disclosed correctly. Two decades of Marsh renewals across every state jurisdiction is the evidence.

Marsh’s core US broking operations don’t accept contingent commissions. Their middle-market arm, Marsh & McLennan Agency, does. That’s not a contradiction — it’s evidence that the framework is flexible enough to accommodate different business models, provided the arrangements are properly documented and disclosed.

One honest acknowledgment: some clients may prefer the embedded commission model precisely because explicit fees make the cost of advice visible in a way that a percentage of premium does not. Transparency can create perceived cost even when the total compensation is unchanged. That’s a real dynamic in some client relationships, and it’s worth knowing going in.

Where That Leaves the Question

The commission system was built around a bundle that the market is beginning to pull apart, whether agencies formalize that or not. AI is compressing the cost of prospecting, placement on standard risks, and routine service faster than commission structures are adjusting. The regulatory framework governing producer compensation was not designed for that unbundling. In most states, it permits it, under conditions. In a few, it explicitly restricts it. In others, the rules don’t clearly address it one way or the other, which means the answer requires a closer look at the underlying statutes.

What the NAIC chart and the Marsh precedent together establish is that the legal question has real answers. They vary by state, require documentation, and in some cases require a conversation with someone who knows your state’s rules in detail. Your state agents’ association or department of insurance is the right first call before changing anything about how your agency charges for its work.

Whether the business question has answers is a separate matter — and one the industry is only beginning to work through. The carriers building the most aggressive AI infrastructure are simultaneously acknowledging, publicly, that the human judgment layer has durable value. The question isn’t whether advocacy work is worth something. It’s whether agencies will figure out how to price it before the bundle compression forces the issue.

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