Definition - What does Collection Fee mean?
A collection fee is the compensation an insurance agent receives for successfully collecting policy premiums from a policyholder. These fees are paid by the insurance company that issued the policy.
Insuranceopedia explains Collection Fee
Collection fees are an alternative to commission payments, and both types of payment are common for insurance agents.
In either case, the payment scheme means that the agent will only receive compensation from successfully selling policies and generating premiums. This allows insurers to ensure that they only pay agents when their work increases revenues for the company.