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For The Manager: Where contingency contracts often come up short

INSURANCE companies have a terrific opportunity to increase profits and improve agency relationships by designing great contingency contracts. Such contracts are fair and create incentives for agencies to produce results beneficial to the carrier,

By Chris Burand | Updated on September 30, 2006

INSURANCE companies have a terrific opportunity to increase profits and improve agency relationships by designing great contingency contracts. Such contracts are fair and create incentives for agencies to produce results beneficial to the carrier, agencies and consumers. In my experience, companies with the fairest contracts also achieve the best operational results. This correlation should give all insurers a powerful incentive to examine their contingency contracts.

While insurance companies and agencies are in daily contact, their worlds are often far apart. The best contracts bridge this chasm. Therefore, the first step in creating a good contingency contract is to understand how it looks from an agent’s point of view. Often, however, insurers fail to do so. Let’s consider five aspects of contingency contracts in which carriers often come up short.

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