•  The effective date for the new Contingent Commission calculation is January 1, 2002. 

•  Normally, the underwriting profit of the Company will be the basis for determining whether a Contingent Commission will be paid. However, at the discretion of Management, a Contingent Commission may not be awarded in the absence of an underwriting profit. 

• If a Contingent Commission is paid, the calculation will be based on the individual agent’s “pure profit”. “Pure profit” will equal Earned Premium minus Management expenses, incurred losses, LAE and unallocated expenses. 

•  Management expenses will include the subject agent’s actual commission. Please note that those agents who receive an average higher commission may experience slightly higher management expense ratios. A higher commission is normally the result of net retention bonus, Contingent Commission, High Tech, extra commission for a rollover, etc. 

• At the discretion of management, agents who are eligible for a Contingent Commission may receive up to 10% of their pure profit. Agents who qualify as Super Agents may receive up to 20% of their pure profit. 

•  The stop loss of $100,000. per loss on a yearly basis will remain in effect. However, if an open loss is increased in succeeding years there may be up to an additional $100,000. stop loss for each of the succeeding years the loss was increased.

PREMIUM BASE: 

The premium base for the Contingent Commission Program will be Earned Premium of $35,000.
NUMBER OF YEARS IN CONTINGENT COMMISSION CALCULATION: One year, being January 1 through December 31, will be used in the calculation.

GRANDFATHERED AGENTS:
Agents grand fathered under the old contract as of April 13, 1982 will be paid for Earned Premiums of $20,000. to $34,999. These agents are not eligible for the Bonus Program until their earned premium is $35,000. The Contingent Commission rate will be paid at half of the commission rate designated for the subject year CC program.

BONUS PROGRAM: 

If the Earned Premium for the current year is at least 10% more than the previous year, 1% additional commission times Earned Premium may be paid. Please note that rollover business will not be included in the bonus program calculation. The bonus program will apply only to agents eligible and qualifying for the Contingent Commission Program.

CONTINGENT COMMISSION REDUCTION: 

If the Earned Premium for the current year is more than 5% LESS THAN the previous year, 1% commission times Earned Premium may be subtracted from the Contingent Commission check. This applies only to agents qualifying for the Contingent Commission Program.  

revised 03/2005

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