REVISIONS:
ü
The effective date for the new Contingent Commission calculation
is January 1, 2002.
ü
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
be awarded in the absence of an underwriting profit.
ü
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.
ü
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.
ü
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.
ü 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.
ITEMS IN THE PROGRAM THAT
WILL REMAIN THE SAME:
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.
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.
U:…/Letters to Agents…CC Rev
05/2002