As part of our ongoing efforts to educate our clients about how Associated Benefits and Risk Consulting is working in your best interests, we have created this FAQ on our compensation arrangements with insurance companies and how this can affect your organization. In general, we would like to point out that commission payments and incentive compensation are a legal and effective means of compensating sales professionals in every industry. Their use is widespread, with varying factors that account for profitability and productivity. From refrigerators to cars, and homes to business equipment, compensation that awards a sales force for excellence is sound business practice.
How do insurance companies compensate insurance agencies?
Insurance companies compensate Associated Benefits and Risk Consulting and many other insurance
agencies in two main ways:
Direct commission, which represents approximately 90% of Associated Benefits and Risk Consulting’s total revenue. Direct commissions are determined through your annual renewal.
Incentive compensation plans, which are not offered by every insurance company. These plans are in place to offer insurance agencies an incentive to provide quality business and high volume and/or member count to the insurance company.
Keep in mind Associated Benefits and Risk Consulting (along with most agencies) maintains relationships
with numerous insurance companies, which enables us to access the broadest range of coverage
How is direct commission determined for employee benefit insurance policies?
The direct commission for your insurance policy may be paid to Associated Benefits and Risk Consulting either through a percentage of premiums or a flat dollar amount.
Exactly how do incentive plans work?
Incentive plans are legal under the insurance laws of all 50 states and the District of Columbia. The incentive compensation is based on year-end calculations. Although each insurance company’s incentive plan is unique, in most cases it is based on:
- The total number of policies with the insurance company.
- The increase in the total number of polices over the past year.
(Associated Benefits and Risk Consulting also receives some common business courtesies and relationship-building
activities [typical to many industries], which are sponsored by insurance companies. e.g., continuing
education seminars, meals, etc.)
How can incentive compensation programs benefit my organization?
The compensation earned provides resources for Associated Benefits and Risk Consulting to conduct market research and product development - and thus better serve you. In addition, the incentive compensation we receive contributes to many value-added services for clients. Specifically, they allow us to provide the following programs on a low-cost or free basis to our clients:
- Free seminars on a variety of business issues.
- Free publications providing updates on human resources, employee benefits, healthcare reform, risk management and workplace safety.
- Low cost access tour law-degreed compliance and workplace consultants through the Hotline.
Should I be concerned when working with Associated Benefits and Risk Consulting that
incentive compensation plans may influence the insurance program that is
presented to me?
No. It is our policy that we do not share incentive revenue with our sales representatives. In fact, only a very limited group of key managers are provided with access to the details of the programs.
To further ensure that incentive compensation does not influence the insurance quotes you receive from your sales representative, Associated Benefits and Risk Consulting has implemented a marketing process that insulates the quoting process from the decision of what insurance options are presented for your consideration. Specifically, our process is as follows:
- Your Associated Benefits and Risk Consulting sales representative meets with you to determine your
- You and your sales representative select insurance companies from which to acquire
quotes, which a marketing specialist then obtains.
- The marketing specialist requests proposals from the insurance companies and works
with the agent to present a comprehensive proposal to you.
- The sales representative reviews the proposal and makes a recommendation to you.
Because of this process, your sales representative is not influenced in any way by incentive
programs when presenting the best insurance solution for your company.
May I see your compensation agreement with the insurance company that
provides our insurance?
Yes. If you would like to review any of the incentive compensation programs that we have in
place with any of the insurance companies related to your business with us, please feel free to
call Mickey Webb, Chief Operations Officier at 800-258-3190.