A remarkably effective tool for im...

A remarkably effective tool for improving profit margins is available to insurance companies: the contingency contract. When a company's contingency contract is written well, it can strengthen the company's relationships with its agency force while simultaneously motivating agency performance. The end is improved profit margins for the company.

Only a scarcely any companies are taking advantage of their contingency contract's power to obtain better underwriting inferences from their agencies. A small in number companies, for example, have contingency contracts that pay extremely well for grave but reasonable, loss ratios. A los ratio is the percentage of each premium dollar an insurer