The Value of Contingent Commissions in the Property–Casualty Insurance Industry: Evidence from Stock Market Returns

27 Pages Posted: 24 Feb 2012

See all articles by Chinmoy Ghosh

Chinmoy Ghosh

University of Connecticut - Department of Finance

James I. Hilliard

Temple University - Department of Risk, Insurance & Healthcare Management

Date Written: March 2012

Abstract

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.

Suggested Citation

Ghosh, Chinmoy and Hilliard, James I., The Value of Contingent Commissions in the Property–Casualty Insurance Industry: Evidence from Stock Market Returns (March 2012). Journal of Risk and Insurance, Vol. 79, Issue 1, pp. 165-192, 2012, Available at SSRN: https://ssrn.com/abstract=2010348 or http://dx.doi.org/10.1111/j.1539-6975.2010.01399.x

Chinmoy Ghosh

University of Connecticut - Department of Finance ( email )

School of Business
2100 Hillside Road
Storrs, CT 06269
United States
860-486-3040 (Phone)
860-486-0349 (Fax)

James I. Hilliard

Temple University - Department of Risk, Insurance & Healthcare Management ( email )

1801 Liacouras Walk
Philadelphia, PA 19122
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
4
Abstract Views
868
PlumX Metrics