Question

Why is past experience with commission rates for existing products important in determining new commission rates?

a.

To attract new customers without losing current policyholders

b.

To maintain consistency and prevent policy lapses

c.

To increase profitability by reducing commission rates

d.

To comply with government regulations on commissions

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (b).To maintain consistency and prevent policy lapses Explanation:Consistency in commission rates across products helps maintain policyholder trust and prevents lapses due to perceived unfairness.

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Q. Why is past experience with commission rates for existing products important in determining new commission rates?
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