HUB
takes pride in the services our brokerages provide to you, our client, for
insurance and risk management programs. For our efforts we are compensated in a
variety of ways, primarily in the form of commissions and contingency amounts
paid by insurance companies and, in some cases, fees paid by clients or third
parties. The means by which we are compensated are described below.
Commission
income — Commission, normally calculated as a percentage of the
premium paid to the insurer for the specific policy, is paid to us by the
insurer to distribute and service your insurance policy. Our commission is
included in the premium paid by you. The individuals at HUB International who
place and service your insurance may be paid compensation that varies directly
with the commissions we receive.
Contingency
income — We also receive income through contingency arrangements
with most insurers. They are called “contingent” because to qualify for payment
we normally need to meet certain criteria, usually measured on an annual basis.
Contingency arrangements vary, but payment under these agreements is normally
the result of growing the business by attracting new customers, helping the
insurance company gather and assess underwriting information and/or working to
renew the policies of existing insureds. There is currently no meaningful
method to determine the exact impact that any particular insurance policy has
on contingency arrangements. However, brokers tend to receive higher
contingency payments when they grow their business and retain clients through
better service. In other words, the amount of earned contingency income depends
on the overall size and/or profitability of all of a group of accounts, as
opposed to the placement or profitability of any particular insurance policy.
For this reason, the individuals involved in placing or servicing insurance are
rarely, if ever, compensated directly for the contingent income that we
receive.
Supplemental
Commissions — Some insurance companies have recently replaced
contingent commissions with supplemental commissions. These commissions, in
fixed amounts, are established annually in advance based on historical
performance measured by criteria comparable to those by which contingent
commissions are calculated. We refer to these commissions as guaranteed
supplemental commissions, or “GSCs”.
Fees
paid by clients — On occasion, with more complex business
insurance programs and where additional resources, products or services are
appropriate, a fee may be negotiated for placement of insurance coverage or
additional services. Fees charged for the placement of insurance will be
outlined in a proposal and approved, usually in writing, prior to the insurer
binding coverage. On occasion, we may receive both commissions and client-paid
fees for placing insurance, which generally will be disclosed in writing to you
in advance. In certain circumstances clients pay us mutually agreed-upon fees
for additional services, such as third party administration of employee
benefits or workers’ compensation programs.
Other
Compensation and Benefits — We may receive revenue or further
benefits from our insurance brokerage activities in other ways, including, but
not limited to, from insurance company promotional events, payments from
insurers for promotional marketing and/or employee training and development,
fees or a percentage of the interest paid to us for the administration of
premium finance contracts, interest paid to us by financial institutions earned
on fiduciary or trust accounts in which we hold your premium payments pending
remittance to the insurance company, and fees paid to us for policy and/or
claims administration and/or loss control services that we provide.
Related
Party Transactions — In limited circumstances, our subsidiaries
or employees may have interests in insurers and reinsurers with whom policies
are placed. We own a reinsurance broker that arranges reinsurance for carriers.
It is possible that coverage placed by our retail brokers could be reinsured
pursuant to placements made by our reinsurance subsidiary. Ownership of a
reinsurance broker also creates an additional, mutually beneficial dimension to
our relationships with insurance companies.
Customer Centric Carriers — We
have access to the products and services of hundreds of insurers. However, we
believe our ability to provide the best combination of products, service, value
and ongoing access to capacity is enhanced by focusing on a manageable number
of carrier relationships. These strategic relationships include many of the most
respected national and regional insurance companies in the insurance industry
(the “Strategic Carriers”). Although we will continue to access our other
insurance company relationships where appropriate, we expect that many of our
clients’ insurance needs may be met through the Strategic Carriers. The
Strategic Carriers may pay us enhanced compensation, which we intend to use in
part to invest in initiatives to improve our ability to serve our customers’
and to optimize their insurance buying experience. A portion of any enhanced
compensation from our Strategic Carriers may be used to incentivize our
employees to prioritize, investigate and access the products and services of
our Strategic Carriers for the purpose of consolidating the number of insurance
markets we deal with, while at the same time addressing the needs and best
interests of our clients. More information regarding our Strategic Carrier
relationships is available upon request from your HUB International insurance
advisor or by visiting our website at hubinternational.com.
This notice is provided by the following companies in the Hub International Limited family of companies:
AIR Insurance Services LLC; Carrión, Laffitte & Casellas, Inc.; Claims Administration Corporation; Flynn Insurance Agency; Hub International Carolinas; Hub International CLC Human Resources Consulting LLC; Hub International Colorado; Hub International Financial LLC; Hub International Gulf South; Hub International Healthcare Solutions LLC; Hub International Insurance Services Inc.; Hub International Investment Services Inc.; Hub International Iowa LLC; Hub International Louisiana LLC; Hub International Mid-Atlantic Inc.; Hub International Mid-America; Hub International Midwest Limited; Hub International Mississippi LLC; Hub International Mountain States Limited; Hub International New England, LLC; Hub International Northeast Limited; Hub International Northwest LLC; Hub International Southeast; Hub International New Mexico; Hub International Texas, Inc.; Hub International Transportation Insurance Services Inc.; Rural Alaska Insurance Agency, Inc.; Sweet & Baker Insurance Brokers, Inc.; The HDH Group, Inc.; Voluntary Benefits Services Inc.