While companies are signing agreements to limit contingent commissions, a study funded by the Independent Insurance Agents & Brokers of America concludes that such payments ensure the survival of smaller and midsized insurers.
The study on the role of producers and compensation in the insurance industry was conducted by Robert Hoyt of the Terry College of Business at the University of Georgia, along with Randy Dumm and James Carson of the College of Business at Florida State University. The study obtained by National Underwriter was completed in May.
The professors found that contingent commissions are not "inherently bad for consumers" and can actually help align the insurers' incentives with those of the agents.
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