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PRO Insurance Managers, Inc. is an independent
insurance broker specializing in providing comprehensive and
cost-effective insurance and risk management services. This
disclosure notice is intended to identify the various methods by
which we are compensated and how these compensation methods are
determined.
As a practical matter broker (agent) compensation falls into
one of three categories: commission, contingency payments and
fees. In some circumstances, broker compensation may be a
combination of commission and fee based revenue.
Commission
The principal source of revenue for most insurance brokers
result from a commission paid by insurance carriers based on the
type of coverage and amount of premium. Commission expense is
built into the premium charged by the carrier and paid by an
insured. Whether premiums are remitted directly to the carrier
or to the broker, who in turn remits a net payment to the
carrier, the earned commission is a specific percentage of
premium. Agreements between brokers and carriers vary so certain
brokers may earn a higher rate of commission than others.
Contingents
Often referred to as "contingencies" or "profit sharing" these
fees are based on the performance of the broker's "book of
business" with the carrier during any given year. Year-end
reconciliation takes into account premium growth and retention
with loss experience (not of a single client but the book of
business overall) often being the most sensitive factor in
determining the amount of contingent (profit sharing)
compensation. Such agreements are fairly commonplace among
agents & brokers.
Fees
Some agencies bill service fees in addition to commission
income, however many states do not permit this practice. As an
alternative to commission compensation, fee based agreements
negotiated between the insured and broker are becoming more
commonplace among medium to large commercial insured's. Fees
associated exclusively with non-commission service items such as
loss control and claims analysis are also routine.
Carrier paid commission is the principal source of revenue,
accounting each year for approximately 85% of agency operating
income. Contingency fees (profit sharing agreements) vary from
year to year but generally account for about 10% of agency
revenue. Consulting and miscellaneous fees make up the balance.
We assure every client and every prospective client
that our decisions with respect to placement of your insurance
have always been and will continue to be guided by the best
interests of our clients.
If you have any questions or if you would like additional
information about any aspect of the compensation we earn on your
account, please contact your client service representative or:
Richard C. Fuchs II
President & CEO
PRO Insurance Managers, Inc.
P.O. Box 24427
Overland Park, KS 66283-4427
800-821-7383
rfuchs@pro4.us
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