Revenues

12 Months Ended

Dec. 31, 2020

Revenues [Abstract]

Revenues

NOTE 2 Revenues

The following tables present the revenues disaggregated by revenue source:

	Twelve months ended December 31, 2020
(in thousands)	Retail		National Programs			Wholesale Brokerage		Services		Other(8)			Total
Base commissions(1)	$	1,054,619	$	422,916		$	273,878	$	—	$	1		$	1,751,414
Fees(2)		275,900		159,337			66,051		174,012		(1,291	)		674,009
Incentive commissions(3)		89,920		549			3,057		—		31			93,557
Profit-sharing contingent commissions(4)		35,785		27,278			7,871		—		—			70,934
Guaranteed supplemental commissions(5)		15,128		(238	)		1,304		—		—			16,194
Investment income(6)		163		756			184		—		1,708			2,811
Other income, net(7)		1,251		42			452		—		2,711			4,456
Total Revenues	$	1,472,766	$	610,640		$	352,797	$	174,012	$	3,160		$	2,613,375

	Twelve months ended December 31, 2019
(in thousands)	Retail		National Programs			Wholesale Brokerage		Services		Other(8)			Total
Base commissions(1)	$	994,170	$	338,058		$	242,380	$	—	$	(128	)	$	1,574,480
Fees(2)		246,135		151,298			56,852		193,641		(1,160	)		646,766
Incentive commissions(3)		80,505		(524	)		1,252		—		27			81,260
Profit-sharing contingent commissions(4)		34,150		17,517			7,499		—		—			59,166
Guaranteed supplemental commissions(5)		11,056		10,566			1,443		—		—			23,065
Investment income(6)		149		1,397			178		139		3,917			5,780
Other income, net(7)		1,096		72			483		1		2			1,654
Total Revenues	$	1,367,261	$	518,384		$	310,087	$	193,781	$	2,658		$	2,392,171

(1) Base commissions generally represent a percentage of the premium paid by an insured and are affected by fluctuations in both premium rate levels charged by insurance companies and the insureds’ underlying “insurable exposure units,” which are units that insurance companies use to measure or express insurance exposed to risk (such as property values, or sales and payroll levels) to determine what premium to charge the insured. Insurance companies establish these premium rates based upon many factors, including loss experience, risk profile and reinsurance rates paid by such insurance companies, none of which we control.

(2) Fee revenues relate to fees for services other than securing coverage for our customers, fees negotiated in lieu of commissions, and F&I products and services.

(3) Incentive commissions include additional commissions over base commissions received from insurance carriers based on predetermined production levels mutually agreed upon by both parties.

(4) Profit-sharing contingent commissions are based primarily on underwriting results, but may also reflect considerations for volume, growth and/or retention.

(5) Guaranteed supplemental commissions represent guaranteed fixed-base agreements in lieu of profit-sharing contingent commissions.

(6) Investment income consists primarily of interest on cash and investments.

(7) Other income consists primarily of legal settlements and other miscellaneous income.

(8) Fees within other reflects the elimination of intercompany revenues.

Contract Assets and Liabilities

The balances of contract assets and contract liabilities arising from contracts with customers as of December 31, 2020 and 2019 were as follows:

(in thousands)	December 31, 2020		December 31, 2019
Contract assets	$	308,755	$	289,609
Contract liabilities	$	80,997	$	58,126

Unbilled receivables (contract assets) arise when the Company recognizes revenue for amounts which have not yet been billed in our systems. Deferred revenue (contract liabilities) relates to payments received in advance of performance under the contract before the transfer of a good or service to the customer.

As of December 31, 2020, deferred revenue consisted of $54.0 million as current portion to be recognized within one year and $27.0 million in long-term to be recognized beyond one year. As of December 31, 2019, deferred revenue consisted of $41.2 million as current portion to be recognized within one year and $16.9 million in long-term deferred revenue to be recognized beyond one year.

Contract assets and contract liabilities arising from acquisitions in 2020 were approximately $11.5 million and $20.0 million, respectively. Contract assets and contract liabilities arising from acquisitions in 2019 were approximately $6.5 million and $9.3 million, respectively.

During the twelve months ended December 31, 2020 and 2019, the amount of revenue recognized related to performance obligations satisfied in a previous period, inclusive of changes due to estimates, was approximately $8.9 million and $17.2 million, respectively. The $8.9 million for 2020 consists of $18.1 million of additional variable consideration received on our supplemental commissions, offset by $7.1 million of revised estimates related to variable consideration on policies where the exposure units are expected to be impacted by the COVID-19 pandemic (“COVID-19”) and $2.1 million of other adjustments.

Other Assets and Deferred Cost

Incremental cost to obtain – The Company defers certain costs to obtain customer contracts primarily as they relate to commission-based compensation plans in the Retail Segment, in which the Company pays an incremental amount of compensation on new business. These incremental costs are deferred and amortized over a 15-year period. The cost to obtain balance within the Other assets caption in the Company’s Condensed Consolidated Balance Sheets was $42.2 million and $26.9 million as of December 31, 2020 and December 31, 2019, respectively. For the 12 months ended December 31, 2020 and December 31, 2019, the Company deferred $17.8 million and $15.1 million of incremental cost to obtain customer contracts, respectively. The Company expensed $2.5 million and $1.4 million of the incremental cost to obtain customer contracts for the 12 months ended December 31, 2020 and December 31, 2019, respectively.

Cost to fulfill - The Company defers certain costs to fulfill contracts and recognizes these costs as the associated performance obligations are fulfilled. The cost to fulfill balance within the Other current assets caption in the Company's Condensed Consolidated Balance Sheets was $77.8 million, which is inclusive of deferrals from businesses acquired in the current year of $1.2 million. The cost to fulfill balance as of December 31, 2019 was $73.3 million. For the 12 months ended December 31, 2019, the Company had a net deferral of $3.3 million related to current year deferrals for costs incurred that relate to performance obligations yet to be fulfilled, net of the expense of previously deferred contract fulfillment costs associated with performance obligations that were satisfied in the period.