Zurich pays commission to agents and brokers as compensation for their work in placing and servicing your insurance. Such commission is generally expressed as a percentage of the premium you pay.
The actual commission that your agent or broker is paid depends on a number of factors. The following describes the process that is generally used to determine the commission.
- As we develop our quote, the commission is based on factors that may include the type of insurance policy, the premium size, individual policy underwriting considerations, other services provided by your agent or broker, and the compensation arrangements we may have with your agent or broker. Also, the actual commission paid may include additional commission amounts payable to certain producers.
- For each type of policy for a particular insurance market segment, Zurich determines a maximum commission that is generally the most Zurich will pay. For some types of policies, it is a flat percentage, and for other types of policies, the percentage is reduced as the policy premium increases.
- In some instances, an agent or broker may request a quote with no commission because compensation arrangements are being made directly with the customer. Please note for those specific instances in which an agent or broker declines to accept commission, we may not be permitted by state law to lower the premiums charged.
This Web site provides information about the nature and range of commissions by line of business. The Commission Payment table below will show information on the commission payments that apply to your policy's line of insurance business. The actual percentage commission that we would pay on your individual policy is not provided on this Web site. All commission arrangements are subject to the laws of the applicable jurisdiction(s).
Line of Business: Products Liability
|Policy Type||Lowest commission rate paid in 2011 1||5th percentile commission rate paid in 20112||Average commission rate paid in 20113||95th percentile commission rate paid in 20114||Maximum commission rate5|
- The percentages shown above only reflect those policies where a commission was paid; they do not include policies where the customer paid a fee in lieu of Zurich paying a commission.
- In addition to the commission amounts set forth above, Zurich may pay an additional commission or fee to some of its producers for additional services they provide to Zurich, such as underwriting. This additional commission can range from 1% to 11% of premium.
1 0% of the policies have a commission lower than this amount
2 5% of the policies have a commission lower than this amount
3 Average Commission Rate is the mean commission
4 95% of the policies have a commission lower than this amount
5 Maximum Commission Rate is generally the most Zurich will pay for this line of business. The maximum shown is based on policy type for a particular insurance market segment, and is provided above on a countrywide basis only and is subject to individual state requirements.
The 2011 commission information displayed is based on direct-booked policy year 2011 business as of 01/31/2012.
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Contingent Compensation *
Contingent Compensation is another form of compensation that may be paid to some agents or brokers if certain business results are achieved. We design our contingent compensation programs to encourage agents and brokers to work with us in building and retaining a profitable book of business. Some agents and brokers choose not to participate in contingent compensation programs with us.
The Contingent Compensation Formula
Contingent compensation is based on a formula that usually includes consideration of your premium and losses along with that of other Zurich customers served by your insurance agent or broker. To determine whether your insurance agent or broker is eligible for an award at the end of the calendar year, we review your agent or broker's business in light of the formula. The formula normally includes one or more of the following components:
We pay a percentage of the eligible business written depending on the total amount of the eligible premium. For most insurance distributors, premium volume consists of existing business and new business. In most instances, it is desirable for us to encourage premium growth. To do so, we have some incentive agreements that specifically reward growth over the prior period or the development of new business.
Profitability of the business is determined by comparing 1) the losses that are incurred and; 2) in some instances the general expenses to 3) the premium.
We may pay contingent compensation for the placement of particular types of business with us.
Maximum and Average Contingent Compensation
For 2011, Zurich American Insurance Company and its affiliates paid an average of 2.33% of written premium in contingent compensation to participating agents/brokers. For 2011, the maximum contingent compensation that Zurich could pay is 7.66% of written premium, though for a portion of our Small Business agents, the maximum could be 13.00%. Where Zurich used certain Program Administrators to place and service policies, Zurich paid an average of 7.06% of written premium in contingent compensation in 2011. For 2012, the maximum contingent compensation Zurich could pay its Program Administrators is 12.50% of written premium.
* Please note that this information is not an indication that your agent or broker participated in a contingent compensation agreement with Zurich. Please contact your agent or broker for specific compensation arrangements associated with your policy.
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In addition to paying base compensation and contingent compensation to agents and brokers in connection with specific policies, we may also provide other benefits to them in the course of our business dealings, including paying for certain meal and entertainment expenses.
Some benefits are promotional events to which agents and brokers may be invited. Promotional events serve to promote Zurich as an insurance carrier available to agents and brokers to place insurance, strengthen our relationships, and enable the agents and brokers to learn more about our products and services. Such events range from lunches, dinners and local sporting events to the Zurich Classic of New Orleans golf tournament. In the course of sponsoring larger events such as the Zurich Classic of New Orleans, we may pay lodging, travel, meals, entertainment and other expenses of agents, brokers and their guests and also may provide gifts and prizes to the agents and brokers during the course of the event or program.
We may also sponsor educational events so that agents and brokers can learn more about our products and services; we may also pay for their professional continuing education.
In addition, we may pay for expenses incurred by agents and brokers for sales or marketing activities, or other customer outreach. Upgrades to agent and broker computer systems are sometimes funded by Zurich.
Also, we may retain agents and brokers for their expertise in providing services such as risk engineering, or underwriting. We may support charities designated by agents and brokers. In some instances, we may provide loans to agents or brokers or acquire an equity interest in them. We also may provide brokers and agents certain gifts of modest value.
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