What does a contingency agreement typically require from an agency?

A contingency agreement usually involves arrangements where an agency receives additional compensation or incentives based on achieving certain performance metrics. The requirement for a target premium level is crucial because it aligns the agency’s goals with the insurance provider's expectations. By setting a specific premium target, the agency is motivated to write a certain level of business that meets or exceeds this benchmark, which is often tied to bonuses or additional support from the insurer.

Consequently, the requirement for a target premium level encourages agencies to actively pursue business opportunities that will meet this financial goal, thus fostering a focused and performance-driven environment. Achieving or surpassing the target can result in benefits that enhance both the agency's profitability and its working relationship with the insurer.

In contrast, the other options might reflect common agency practices or expectations but do not specifically capture the essence of what a contingency agreement entails as effectively as the target premium level does.