Producer Compensation Disclosure
HM Insurance Group’s member companies sell and service their group insurance products and services through an extensive network of independent insurance agents and brokers (“producers”).
Independent producers are not our employees; however, we do compensate them for placing group insurance with us and for providing other services to our customers. The following is a brief overview of the types of compensation we pay our producers.
Our compensation system is designed to encourage producers to sell our group products, to assist us in servicing accounts and to retain profitable business with us. Our compensation programs fall into three basic categories: 1) commission; 2) contingent/override compensation; and 3) additional incentives. Producers may receive some or all forms of these payments, depending on the producer’s business relationship with us.
Generally we pay our producers a base commission for each group insurance policy they sell. Base commission is a percentage of the premium charged to you for the group policy and is paid on new group policies and at renewal.
The amount of base commission depends on the type of group insurance product sold, risk classification, producer size, state where the risk is located or services provided to the policyholder. We offer a variety of group insurance products, and therefore pay a wide range of commissions. For the majority of our group products, we pay producers a base commission in the range of 5 percent to 15 percent. The percentage paid may vary by product and group.
Producers may charge their customers an additional fee related to services they provide. Any such fee is in addition to a base commission they receive from us. In certain transactions, more than one producer may be involved in placing insurance coverage with us. If more than one producer is involved, both producers may receive a base commission or the base commission is split between the producers.
In addition to base commissions, producers also may be eligible to receive “contingent” or “override” compensation equal to a percentage of the premium a producer has placed with us for a specific type of group insurance. This form of compensation is contingent on various factors, such as the producer’s ability to meet pre-established goals for profitability, retention and sales volume during a particular year. If a producer does not meet the pre-established goals for the year, then that producer is not eligible to receive the contingent/override compensation.
Additional Incentives and Benefits
At times we will provide an opportunity for producers to receive additional compensation for placing specific types of group polices with us, helping us pursue new business opportunities with their customers, meeting pre-established goals or performing other tasks. This additional incentive, for the added work, is a trip to our annual sales conference, which results in additional compensation to the producer.
We may also reimburse 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. We also may pay for business meals and provide other entertainment for our producers.
Also from time to time we may give producers complimentary items of nominal value. These items are generally not based on profitability or growth but are typically in the form of marketing items to promote new products and programs.
Other Important Information
This overview provides information about how HM Insurance Group currently compensates its producers. Because this is an overview, there are exceptions not addressed within the scope of this discussion. If you would like additional information about a commission paid on your group policy, please contact your producer. Also, please check this website periodically for updated information on this subject. Producers are evaluated and compensated in a consistent and non-discriminatory manner.
Department of Labor Advisory
In accordance with the Department of Labor Advisory Opinion 2005-02A, information on Form 5500/Schedule A, customer reporting must include all monetary and non-monetary compensation including, but not limited to, contingent commissions, prizes, trips, finders’ fees and compensation amounts that are based on productivity or eligibility. The monetary and non-monetary compensation amounts described will be allocated to the individual customers and included on any Form 5500/Schedule A information that is requested by a producer or a customer.