What does the term "commission" refer to in an insurance context?

In the context of insurance, the term "commission" specifically refers to the payment received by agents for selling a policy. This is a standard practice within the insurance industry, where agents are compensated based on the premiums generated from the policies they sell. Commissions provide financial incentive for agents to recommend and sell insurance products, which benefits both the agent and the insurance company.

It's important to understand that the other options you provided do not accurately define "commission." The act of doing something that should not have been done doesn’t relate to the financial terms or practices associated with insurance sales. The role of acting on behalf of the insured is more closely related to the duties and responsibilities of an agent, rather than a financial term. Lastly, errors made during the application process refer to mistakes that may affect coverage or the validity of the insurance policy, which is unrelated to how agents earn their income. Thus, the definition of "commission" is singularly focused on the payments made to agents for their sales efforts.