Collection Fee

What Does Collection Fee Mean?

A collection fee is the compensation that 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 serve as an alternative to commission payments, both of which are common compensation structures for insurance agents.

In either case, this payment scheme means that agents receive compensation only for successfully selling policies and generating premiums. This approach allows insurers to ensure they pay agents only when their efforts contribute to increased revenues for the company.