Wharton Study Finds Agents, Brokers Play Critical Role in Buying Process
National News • June 8, 2005
Profit-based contingent commissions align the interests of independent agents and brokers and the insurer so that correct pricing of policies is achieved, thereby alleviating adverse selection, ...
Insurance Journal is not responsible for the content of the message below.
Subject: RE: Contingent Commissions
Posted On: June 9, 2005, 12:51 am CDT
Posted By: Hollis Brown
Comment:
I still don't understand what the fuss is all about. Unless the state establishes a fixed commission percentage by line of business and prohibits additional fees there will always be financial incentives to place business with one or another company.
As a personal lines agent and broker I have placed business earning a range from 5% to 25% commission often charging an additional service fee. Now, how could adding 2% points to a 15% commission compete with the carrier that pays me 25%? Contingents don't matter, it's the total compensation that has some influence. But, I have sold insurance for 5% based on the competitive market and the positive risk characteristics of the client and my expectation of building a solid long term client who can't be taken away from me. On the other hand, some of my clients who earn me 25% commission have the best company available for their needs.
For the Attorney General to say that commission rate and the best price are the only determinants of the best policy for a client is balderdash. Details of policy coverage, company stability & service, and fit between the consumer's lifestyle and the company's business culture are also key.
Every day I have to balance providing the best for my client and finding to make a living. If I only cared about maximizing immediate income of course I would only offer 25% commission policies. But, I can't sell that to everyone nor would I want to.
Subject: RE: Contingent Commissions
As a personal lines agent and broker I have placed business earning a range from 5% to 25% commission often charging an additional service fee. Now, how could adding 2% points to a 15% commission compete with the carrier that pays me 25%? Contingents don't matter, it's the total compensation that has some influence. But, I have sold insurance for 5% based on the competitive market and the positive risk characteristics of the client and my expectation of building a solid long term client who can't be taken away from me. On the other hand, some of my clients who earn me 25% commission have the best company available for their needs.
For the Attorney General to say that commission rate and the best price are the only determinants of the best policy for a client is balderdash. Details of policy coverage, company stability & service, and fit between the consumer's lifestyle and the company's business culture are also key.
Every day I have to balance providing the best for my client and finding to make a living. If I only cared about maximizing immediate income of course I would only offer 25% commission policies. But, I can't sell that to everyone nor would I want to.