Despite criticism and legal action by regulators over insurancebrokerage contingent commissions, a new report by two WhartonSchool of Business professors argues such fees are a necessity inthe marketplace.
In their newly published report titled "The Economics ofInsurance Intermediaries," professors David Cummins and NealDoherty noted that while most contingent fees are eventually passedon to policyholders in the form of higher premium, it is "a matterof debate" whether this harms or benefits policyholders.
The professors argued that contingent fees actually can bebeneficial to clients despite allegations that such fees are akickback from the insurer that compromises the intermediary'sobligations to its clients.
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