Commission or Contingency

[MT_Agent]

Would you rather have a contract that offered higher commission percentages or stay with the current standard of offering contingencies if you reach a certain benchmark with favorable a loss ratio?

The younger owners were more open to getting a higher commission, where the older ones liked the contingency program. Let me also state that everyone in the conversation qualified for contingencies.

[AgencyEquity]

Contigencies provide a better incentives for agencies to carefully underwrite accounts as well as target more profitable accounts. Carriers that allow for more leniency in underwriting to agencies that deliver favorable results is truly the way to go. Furthermore carriers that undewrite the agencies they appointment vs. underwriting individual policies that is written is much more efficient way to get quality results, it works for agencies who play by the books as well as the carriers. It's truly a win win for all involved and delivers higher returns to both the agency and the carrier.

[sethm]

I agree with AgencyEquity. Contingencies are paid based on the volume of business placed with a particular insurance company. The fact that a broker has a contingency-type contract with a specific insurance company can be of great value to the insured resulting in a lower price for the insured.