Question

What is the purpose of claw-back terms in commission agreements?

a.

To increase initial commission rates

b.

To penalize agents for policy cancellations

c.

To encourage persistency and policy retention

d.

To ensure compliance with regulatory requirements

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (c).To encourage persistency and policy retention Explanation:Claw-back terms penalize agents for policy cancellations, incentivizing them to focus on persistency and policy retention.

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Q. What is the purpose of claw-back terms in commission agreements?
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