Producers
We primarily sell our insurance products and services through an extensive network of independent insurance agents and brokers, and we consider this the preferred way of distributing our products. We call these independent agents and brokers "producers."
Producers are not our employees. However, producers may receive compensation from us for placing your insurance with us. This is an overview of how we compensate producers.
Producer Compensation
We design our compensation system to encourage producers to sell our products, to assist us in evaluating risks and servicing accounts, and to maintain a volume of profitable business with us. Our compensation programs fall into three basic types: 1) Commission; 2) Contingent Commission; and 3) Business Production Incentives. We might not pay all these types of compensation, or any compensation, to a producer who places a policy with us.
- Commission Programs
We generally pay producers a fixed commission for business placed with us. We pay commission on new and renewal policies. This commission is usually a fixed percentage of the premium a policyholder pays. The percentage varies according to factors such as the type of business, type of risk and the state where a risk is located. - Contingent Commission Programs
- Contingent commission, sometimes referred to as a performance plan or a profit incentive program, provides for payment when the producer achieves pre-set goals. A producer may have separate contingent commission plans with our different business units. We normally evaluate performance against the pre-set goals annually. If the producer has met the goals, the payment amount is usually a percentage of the premium a producer has placed with us for specific types of insurance.
- We may also reimburse certain producers’ expenses relating to marketing activities. This may include advertising materials, training expenses, or goods and services that help to promote our company and our products.
- A contingent commission plan generally uses one to several separate goals in combination to determine if a producer will receive a payment. These goals may include:
Profitability
We measure a producer’s profitability by comparing losses to premium on the policies the producer placed with us for specific types of insurance. The policies the producer has placed with us must achieve a pre-set ratio of losses to premium to be considered profitable.
Volume
We measure the premium volume of policies a producer places with us. We may measure one or more types of insurance.
Growth and Retention
We measure whether the amount of business a producer has with us is increasing or decreasing. We may look at change in premium volume, change in the actual number of policies, number of newly written polices or a combination of these. This may vary by type of insurance.
Tactical Performance
We measure if a producer has met pre-set tactical performance goals relating to account services, such as the percentage of the producer’s customers who sign-up for electronic fund transfer premium payments. These goals often differ by business unit and by producer. - Business Production Incentive Programs
At times we will provide producers or their employees the opportunity to receive additional compensation for placing specific types of polices with us, helping us pursue new business opportunities with their customers, or performing other tasks. At times this will take the form of a sales contest where cash or other prizes are awarded, while other times it may take the form of additional commission. These incentives are designed to encourage the placement of business with us.
Others Who Distribute Our Products
Some of our business units distribute their products through sources in addition to producers. These include:
- Surplus lines brokers and wholesale program managers. We compensate them in a similar fashion to producers
- We have employees who sell insurance for us. In addition to salary, they may receive additional compensation based on the number of policies they sell, premium volume or other criteria.
Additional Information
If you would like additional information regarding compensation arrangements applicable to your account, please contact your agent or broker directly.