Question

How does the desired profitability target influence commission rates?

a.

Higher profitability targets allow for higher commission rates

b.

Lower profitability targets lead to higher commission rates

c.

Profitability targets have no impact on commission rates

d.

Higher profitability targets limit commission rate increases

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (d).Higher profitability targets limit commission rate increases Explanation:Desired profitability targets constrain the ability to increase commission rates beyond a certain point, as excessive commissions can negatively impact company profitability.

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Q. How does the desired profitability target influence commission rates?
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