Factors influencing commissions earned by brokers: a case study of Clarkson Insurance Brokers
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The insurance industry plays a vital role in the financial system of an economy. In Uganda, there has been a low uptake of insurance (1%) and previous studies show that insurance intermediaries like brokers play a significant role in increasing insurance penetration. Brokers work in the best interest of their clients and earn commissions. In a commission-based system, the broker is motivated to produce more since it will reflect in the earnings. The main aim of the study is to determine factors influencing commissions earned by brokerage firms; a case study of Clarkson Insurance Brokers. The study was based on an analysis of 2,120 policies that were brought on board by the broker for 2021. Univariate analysis, bivariate analysis, and multivariate analysis were performed on the variables to establish relationships using STATA. The results of the study revealed significant relationships between commission earned and policy status (p = 0.000), risk covered (p = 0.000) and premium collected (p = 0.000). Premium explains 94% of the variation in commissions earned. Therefore, insurers should design more microinsurance products that suit the Ugandan market which in turn will increase the premiums collected by brokers hence more commission earnings. The regulatory authority should improve the commission rates awarded to brokers. Brokers should focus more on customer retention since most of their earnings come from renewal policies.
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