The Value of Contingent Commissions in the Property–Casualty Insurance Industry: Evidence from Stock Market Returns
University of Connecticut - Department of Finance
James I. Hilliard
University of Georgia - Department of Insurance, Legal Studies, Real Estate
Journal of Risk and Insurance, Vol. 79, Issue 1, pp. 165-192, 2012
Insurance producer compensation has incorporated contingent commissions for decades. In 2004, the New York State Attorney General sued insurers and brokers, alleging compensation abuses and calling for elimination of some forms of contingent commissions. Daily stock price return data reveal negative announcement‐period portfolio returns for property–casualty carriers, suggesting expected negative cash flow effects. Firm‐level losses were related to intensity of contingent commission use, suggesting that the effects of such regulatory changes would be felt most by firms that relied on contingent commissions. Investors believed contingent commissions were valuable not only for producers but also for carriers.
Number of Pages in PDF File: 27Accepted Paper Series
Date posted: February 24, 2012
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo2 in 0.656 seconds