Despite criticism and legal action by regulators over insurance brokerage contingent commissions, a new report by two Wharton School of Business professors argues such fees are a necessity in the marketplace.
In their newly published report titled "The Economics of Insurance Intermediaries," professors David Cummins and Neal Doherty noted that while most contingent fees are eventually passed on to policyholders in the form of higher premium, it is "a matter of debate" whether this harms or benefits policyholders.
The professors argued that contingent fees actually can be beneficial to clients despite allegations that such fees are a kickback from the insurer that compromises the intermediary's obligations to its clients.
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