Broker Insurance by tzm14488


Broker Insurance document sample

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The Addis Group acts as an agent or a broker for our clients.

An insurance agent is an individual licensed by a state that represents one or more carriers and
works on their behalf. When a client has need for an insurance product, the agent obtains quotes
on those products from insurance carriers with whom the agent (or the firm) is appointed. The
agent then presents these product selections and quotes to the client. Should the client choose to
purchase a product form one of the represented insurance carriers, the agent’s firm receives a
commission from that insurance carrier.

An insurance broker is an individual licensed by a state who, generally speaking, represents a
client seeking to purchase insurance coverage. Brokers search the broader insurance marketplace
to find the best placement for insurance coverage among various insurance carriers, taking into
consideration all the variables including price, coverage, quality and other factors. Brokers are
professional advisors who generally are not appointed with the carriers with whom they (or their
firms) place insurance coverage.

An individual (or firm) may be an agent with respect to some insurance placements and a broker
with respect to others. This also depends upon the state in which the agent is based. When the
individual (or firm) places insurance with a carrier with whom the individual (or firm) is
appointed, the individual (or firm) is acting as an agent. When an individual (or firm) places
insurance on behalf of a client with a carrier with whom the individual (or firm) is not appointed,
the individual (or firm) is acting as a broker.

An agent is generally compensated for the placement of a policy with an appointed carrier by a
commission from the carrier. Either commission or an agreed-upon fee generally compensates a
broker by placing insurance for a client. Sometimes, an agent or broker is compensated by a
combination of fees and commissions. The Addis Group fully discloses these arrangements to
the client.

At The Addis Group, our focus is on the needs of our client. Whether we are acting as agent or
broker, The Addis Group is committed to providing the best insurance products and risk
management solutions for our clients.

Does The Addis Group receive compensation in addition to its collected commissions and/or

In addition to commissions and/or fees, The Addis Group may receive a contingent commission
or profit sharing distribution from certain insurance carriers. These distributions are not tied to
any specific client and are dependent upon the growth and profitability of The Addis Group’s
entire book of business with the particular carrier. Furthermore, our Code of Ethics and
Standards of Professional Conduct Policy strictly govern the giving and receiving of gifts by our
The Addis Group’s position on contingency income.

Profit sharing or contingency commission arrangements are essentially bonuses a firm receives
from insurance carriers. Generally, the bonuses are based on profitability and volume: when a
firm’s book of business with a particular insurance carrier produces a profit for that insurance
carrier and when a firm sells a certain number of the carrier’s products. Typically, national
averages for profit sharing and contingency commissions amount to 10% or less of broker

The Addis Group periodically receives profit sharing or contingency income through contractual
arrangements with insurance companies. These standard industry agreements do not have
guaranteed placement fees, and compensation is based on our entire book of business with the
carrier, not a particular account or placement.

    •   Our brokers, agents and consultants do not direct account placements based on
        contingency agreements.
    •   Our brokers, agents and consultants are not privy to the terms of contingency
    •   Our brokers, agents and consultants receive no direct compensation based on
        contingency agreements. Contingency income is received by The Addis Group and is
        used to pay ordinary expenses of the organization.

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