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Agent Incentive Program - Converting a Book of Business to Fulmont Mutual Insurance Company

INTRODUCTION:

This program is part of our “Agency Incentive Program” to encourage agents to place new business with Fulmont Mutual Insurance Company. Fulmont will pay an agent additional commission for converting or rolling over a book of business from another insurance company to our Company, provided the book meets our established criteria. This program will be offered to our agents that have lost a company and/or a market for a specific line or lines of business.

It is our aim to complete a rollover with a minimum of work on the part of the agency and with a minimum of hassle to the agency.

The Marketing Director has been designated as the person responsible for administration of this new program. This will include the plan and/or technique for marketing the program.

GUIDELINES AND PROCEDURES:

Additional Commission

Up to 10% (sliding scale)

Paid only on the first year that the policy is accepted by us.

Determination of Commission Percent

Sliding scale Commission – see Exhibit A.

Terms of Rollover

Up to three years

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Guidelines to Determine Eligibility & Additional Commission Percent

Review three years’ profitability and production reports of the applicable book. If the average loss ratio for three years does not exceed 55%, it is acceptable. If the average loss ratio is over 55%, determine if there were shock or catastrophic losses that can be excluded from the determination.

You may also want to consider accepting the rollover but pay an additional commission on those lines of business with an acceptable loss ratio, or the Plan Administrator may establish a different commission rate.

Policies must be types written by our Company.

Policy forms, coverages and deductibles should be comparable to Fulmont.

Review bordereau of policies – large size risks cannot exceed our maximum acceptable risk range.

A sample of risks will be examined for the following:

• Quality of Risk

• Does Risk fit Underwriting Guidelines?

• ACV or RC

• Low Valued Risks

• What type of Commercial Risk is predominate?

• Will we accept all risks?

• What will our inspection procedure be – each risk, a sample, or at next renewal?

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When the decision has been made to accept the book transfer, it is our policy to make the rollover a smooth and relatively simple process. It is not necessary for the agency to submit a new application, photo and supporting data to Fulmont. Our Company Representatives will travel to the Agent’s office and complete the following:

• Underwrite all applications in the book. Will discuss any application not meeting Company underwriting criteria.

• Photocopy all accepted applications, photos, estimators and other pertinent information.

• Each time a book is accepted, an underwriter will be designated to be responsible for the transfer of policies. They must ensure that only the policies listed on the bordereau are submitted for the additional commission percentage. New business will not qualify for this program.

The underwriter will review the application for accuracy to rate and complete the policy. If information is lacking, it will be the responsibility of the Company Representative who performed the rollover to retrieve the missing information from the agency.

The Underwriter will also be responsible for reporting the temporary additional commission rate to the data processing department. The data processing department will establish guidelines for reporting the additional rate.

EXHIBIT A

The following is the sliding scale commission rate for the agent incentive program of rolling over a book of business to Fulmont Mutual Insurance Company.

The Company reserves the right to change the additional commission rates when there are variances from the established guidelines. Once a variance is established, the new commission rate will apply to all like situations. The change could lower or raise the percentages, however the maximum additional commission allowed under this program is ten percent.

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ADDITIONAL FACTORS:

All conditions of the rollover should be written into an agreement and signed by a Company Representative and the agent. The Commission rate, inspection and any other pertinent terms will be included in the contract.

Only those policies on bordereau qualify. New business does not qualify. Endorsements to policies on the bordereau with an effective date greater than the date the rolled-over policy, will not qualify for the additional commission.

This offer of additional commission may not be used in conjunction with any other agent incentive program with the exception being the Contingent Commission program and the Contingent Commission bonus program, i.e., no compounding of this program with additional commission, monies or prizes. (Will be included in wording of contract.)

The Underwriter will report the additional commission to the Data Processing Department as follows:

• Record the rollover and the regular commission rate on the to p sheet for each application involved.

• Example: HO 20% & rollover 10% = 30% Commission

• The computer will bring the commission back to the normal rate either at the time of the next money endorsement endorsement or at the next annual billing (whichever is first).

• The anticipated rollover and conditions must be discussed with the President before making a commitment to the agent.

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