Disclosure of Sources of Compensation
We conduct all of our business in a transparent manner. This includes planning, execution, marketing, administration and compensation. We will work for commissions and/or fixed fees and will eliminate or disclose contingent income in a manner suitable to you. We do not own any affiliated firms from whom we might collect additional income.
Hays Companies may be compensated for our work in a variety of ways, including the following:
- Client Fees. In some cases, our clients pay us negotiated fees for handling their insurance needs. Any such fees to be paid by the client are set forth in the written agreement between Hays Companies and our client.
- Regular Commissions: Insurance companies with which we place business generally pay us commissions for the placement or renewal of policies. In most cases, such commissions are calculated as a percentage of the premium paid to the insurance company for the specific policy and are included in our client’s premium cost. Occasionally the commission may be a fixed amount negotiated between us and the insurer. In some cases where clients pay us fees in connection with the placement and servicing of their insurance business, commissions may be credited against any fee to be paid by the client; if so, this will be set forth in our written client agreement.
- Contingent Commissions and Other Incentive Payments: Some of the insurers that Hays Companies represent grant us the opportunity to receive contingent commissions or supplemental income. Unlike regular commissions, contingent commissions and supplemental income are not tied to a specific policy, but rather are generally tied to various criteria relating to the overall business we place with those insurers, typically measured on an annual basis. These contingent commissions and supplemental income may be based on a number of factors relating to the business placed by our agency with the insurance company, including growth in premium, loss ratios, total written premium, premium volume, retention of business, profitability, and/or other criteria. Further, in connection with the placement of insurance, we may also receive compensation from intermediaries, such as wholesalers, other agencies and brokers, or re-insurers. In addition, some insurance companies may offer our agency other incentives or payments, such as marketing or administrative support, promotional fees, educational costs, and/or prizes, gifts, or awards (e.g. meals, trips, etc). In some cases, we may enter into relationships with an insurance company whereby we provide the insurer with additional services for which we receive a fee, such as premium finance contracts, policy or claims administration, or loss control services. In some cases, we may own stock in a particular insurance company or reinsurance company
- Interest Income: In some cases where our clients pay for insurance policies through our agency (instead of by direct payment to the insurer which issued the policy), we may receive income from interest accruing on amounts held for payment to insurers.
This synopsis provides an overview of our general compensation practices. Because it is only a general overview, there may be exceptions not addressed above. Hays Companies will disclose to our clients at their request the actual or anticipated compensation we receive in connection with the issuance or placement of insurance business and will upon request provide more information about our contingency fee and supplemental income arrangements with particular insurers.