What incentive might a carrier provide to an agency to place business with them?

Contingency agreements are a compelling incentive that carriers may offer to agencies to encourage them to place more business with them. These agreements typically specify that the agency will receive an additional payment or a percentage of the overall premiums written if they meet certain pre-defined production thresholds or objectives over a specified time period. This creates a financial incentive for agencies to prioritize the carrier's products, effectively aligning the interests of both parties.

Carriers use contingency agreements to promote loyalty and encourage agencies to focus on their offerings, thereby increasing the volume of business directed to them. This mutually beneficial arrangement can enhance the carrier’s market presence while providing the agency with the opportunity for additional income based on their performance.