SOFA-CFE · Question #335
A __________________ reflects the actual profit developed under the contract.
The correct answer is C. contingent commission. A contingent commission is an additional commission paid to an agent or broker that is directly tied to the profitability (loss experience) of the business they place with an insurer - it literally depends on how much actual profit the insurer earns from that block of policies…
Question
A __________________ reflects the actual profit developed under the contract.
Options
- AActual commission
- BService commission
- Ccontingent commission
- Dmiscellaneous commission
How the community answered
(38 responses)- A3% (1)
- B8% (3)
- C71% (27)
- D18% (7)
Explanation
A contingent commission is an additional commission paid to an agent or broker that is directly tied to the profitability (loss experience) of the business they place with an insurer - it literally depends on how much actual profit the insurer earns from that block of policies. Options A (actual commission) and D (miscellaneous commission) are not standard insurance commission types and serve as plausible-sounding distractors with no specific definition tied to profit under a contract. Option B (service commission) refers to compensation for ongoing policy servicing tasks, not to profit performance.
Memory tip: Think of "contingent" as "conditional" - a contingent commission is contingent on profit. If the insurer profits from your business, you share in that success.
Community Discussion
No community discussion yet for this question.