Agents & Brokers

Broker and Independent Agent Compensation

The term “Chubb” as used in this document signifies the US-based property and casualty insurers that were part of the “Chubb Group” during 2016. 

Chubb believes that policyholders should have access to information about Chubb’s policies and practices related to the payment of commissions to brokers and independent agents. The following policies apply to compensation Chubb provides to insurance brokers and independent insurance agents in connection with the placement of property and casualty insurance business with Chubb’s offices situated and issuing insurance policies in the United States or its territories. Independent agents represent Chubb on a non-exclusive basis. Chubb is also represented by exclusive agents, who represent Chubb in a particular product or product line and do not offer products of the same type to policyholders for other insurers on a competitive basis. Chubb’s exclusive agents are subject to compensation arrangements that may include those described below and other arrangements.

Standard Commissions

A standard commission is a specific dollar amount or percentage commission on the premium set (a) at the time of the purchase, renewal, placement or servicing of a particular insurance policy or (b) on a particular class of policies in advance of the purchase, renewal, placement or servicing of contracts within that class of policies.

Chubb may pay standard commissions to brokers and independent agents.  In addition, Chubb has several agreements with brokers and/or independent agents to pay an additional commission percentage for certain types of business. 

Contingent Commissions

A contingent commission is compensation paid to a broker or independent agent contingent upon its: (a) placing a particular number of policies or dollar value of premium with Chubb; (b) achieving a particular level of growth in the number of policies placed or dollar value of premium with Chubb; (c) meeting a particular rate of retention or renewal of policies in force with Chubb; or (d) placing or keeping sufficient insurance business with Chubb to achieve a particular loss ratio or other measure of profitability.

Chubb’s current policy is to only enter into contingent commission agreements with brokers or independent agents when approved by certain Chubb senior officers.  Chubb has entered into a number of contingent commission arrangements based on premium volume, premium retention and/or loss ratio with its brokers and independent agents on a number of lines of business including Homeowners, Auto Liability, Auto Physical Damage, Valuables (Inland Marine), Earthquake, Recreational Marine, Personal Umbrella, Commercial Agriculture, and various other commercial lines business.

Supplemental Commissions

The term “supplemental” commission is utilized to describe two different types of payment.  The first is a specific dollar amount or percentage commission on the premium set prior to purchase or renewal of a particular insurance policy. The percentage paid as supplemental commission for policies in a given year is determined at the beginning of the year based on past agency performance, as measured by profitability, premium retention, and premium growth.  Certain independent agents are eligible to receive these types of supplemental commissions, in addition to a standard commission, as part of the compensation paid by PRS for Homeowners, Auto Liability, Auto Physical Damage, Valuables (Inland Marine), Earthquake, and Umbrella lines of business. Certain independent agents are also eligible to receive supplemental commissions in the existing Chubb Recreational Marine and Marine Facilities product lines.    

The term “supplemental” commission is also utilized to describe volume-based contingent commission agreements described above under “Contingent Commissions.” 

Guaranteed Supplemental Compensation

In addition to standard commissions, producers during 2016 also may have received guaranteed supplemental compensation ("GSC") from Chubb, which consisted of an additional commission percentage on eligible business. Eligible lines varied by year. Each qualified producer's GSC percentage was fixed at the beginning of the calendar year, based on its performance (in terms of growth, retention and profitability) in the prior year. This percentage remained fixed for all policies written during the year and was payable in lump sum in January of the following year.  This program was discontinued and therefore no GSC will be payable during 2017. 

Cornerstone Program

Producers meeting certain requirements can achieve the Chubb Commercial Cornerstone designation.  Cornerstone producers are eligible for contingent commission (as set out above), and other benefits such as marketing support, access to specialists, liaisons, educational opportunities and information services and select vendor discounts. 

Producer Incentive Awards

Chubb may provide individual producers and customer service representatives employed by an agency with incentives for participating in sales contests.  These may be in the form of cash or non-cash awards based upon the number of policies written, quotes obtained, or other performance objectives established by Chubb. 

Interest on Premium Collected

It is common in the industry for producers who collect premium from insureds on behalf of insurers to deposit such premium in interest-bearing trust accounts and to retain any interest earned before remitting such funds to the insurer. Chubb permits this practice, provided that the producer meets its contractual payment obligation to Chubb and complies with any other applicable disclosure or other regulatory requirements. 

Loans

Chubb may provide producers with loans.  The terms and conditions of such loans vary depending upon the situation.  The loans are generally made available to key producers for agency support, acquisitions, system upgrades, or other appropriate needs pertaining to the agency. 

Disclosure of Policy-Specific Broker Compensation

Chubb encourages brokers and independent agents to disclose to policyholders the commission Chubb has paid or may pay the broker in connection with the issuance or placement of the policyholder’s Chubb policy, particularly where such disclosures are required by law.  Chubb will also disclose to its present or prospective policyholders at their request, at the time of issuing a quote or subsequently, the commission (if any) that Chubb has paid or may pay to a broker or non-exclusive agent in connection with the issuance or placement of the policyholder’s property and casualty insurance policies issued by Chubb offices in the United States or its territories.

Ranges for Contingent and Guaranteed Supplemental Commission

The range for contingent commission, additional commission and GSC  paid during 2016 was 0% to 7.5%. 

Range of Compensation for Insurance Products: Standard Commissions

Ranges for standard commission paid by Chubb to brokers and independent agents for particular types of insurance products are set forth below. The standard commission data reflects the premiums and standard commissions on policies booked by Chubb in 2016. The below information is historical only; policies written in 2016 and thereafter may reflect commission rates outside of these ranges. This information will be updated annually.

The ranges for standard commissions cover only policies where Chubb actually paid a standard commission and do not reflect situations in which Chubb pays no commission (in such situations, the standard commission would be “zero”). Chubb has excluded from the calculation of the commission range premiums that appear to represent data anomalies.

Ranges for Puerto Rico:

The below ranges do not include agents transacting business in Puerto Rico.  The ranges for such agents are 3-30%. 

Ranges for Companies that were owned directly or indirectly by Chubb Corporation prior to January 14, 2016:

All commission percentages for these companies were within the range of 0% to 7.5%.

Ranges for Companies that were owned directly or indirectly by ACE Limited prior to January 14, 2016:

ASL 01 Fire Insurance.

The commission ranges set forth below are applicable to all Fire Insurance Policies, which may include the following coverages: Standard Multiple Peril, Commercial Property, Personal Property and Wind.

 1% - 35%

ASL 02 Allied Lines Insurance.

The commission ranges set forth below are applicable to all Allied Lines Insurance Policies, which may include the following coverages: Personal Property, Commercial Property and Federal Flood.

 1% - 28%

ASL 03 Farmowners Multiple Peril Insurance.

The commission ranges set forth below are applicable to all Farmowners Multiple Peril Insurance Policies, which may include the following coverage: Standard Multiple Peril.

 12% - 26%

ASL 04 Homeowners Multiple Peril Insurance.

The commission ranges set forth below are applicable to all Homeowners Multiple Peril Insurance Policies, which may include the following coverages: Standard Multiple Peril and Business Owners Protection.

 2% - 28%

ASL 05 Commercial Multiple Peril Insurance.

The commission ranges set forth below are applicable to all Commercial Multiple Peril Insurance Policies, which may include the following coverages: Standard Multiple Peril, All Risk Property, and Business Owners Protection.

 1% - 35%

ASL 08 Ocean Marine Insurance.

The commission ranges set forth below are applicable to all Ocean Marine Insurance Policies, which may include the following coverages: Offshore Property and Offshore Construction.

 1% - 30%

ASL 09 Inland Marine Insurance.

The commission ranges set forth below are applicable to all Inland Marine Insurance Policies, which may include the following coverages: Energy Warranty, Offshore Property, Offshore Construction, Hi-Tech Boiler and Machinery, Computer Systems, Weather and Builders Risk.

 1% - 31%

ASL 11 Medical Malpractice Insurance.

The commission ranges set forth below are applicable to all Medical Malpractice Insurance Policies.

 2% - 26%

ASL 12 Earthquake Insurance.

The commission ranges set forth below are applicable to all Earthquake Insurance Policies, which may include the following coverages: Personal Property and Homeowners.

 2% - 28%

ASL 16 Workers' Compensation Insurance.

The commission ranges set forth below are applicable to all Workers’ Compensation Insurance Policies, which may also include Excess Workers’ Compensation Insurance.

 1% - 30%

ASL 17 Other Liability Insurance.

The commission ranges set forth below are applicable to all Other Liability Insurance Policies, which may include the following coverages: Directors and Officers Liability, Errors and Omissions, General Liability, Miscellaneous Professional Liability, Employment Practices Liability, Contractual Liability, Excess, and Umbrella.

 1% - 30%

ASL 18 Product Liability Insurance.

The commission ranges set forth below are applicable to all Product Liability Insurance Policies.

 3% - 25%

ASL 19 Auto Liability Insurance.

The commission ranges set forth below are applicable to all Auto Liability Insurance Policies, which may include the following coverages: Primary, Excess, Commercial, and Personal.

 1% - 30%

ASL 21 Auto Physical Damage Insurance.

The commission ranges set forth below are applicable to all Auto Physical Damage Insurance Policies, which may include the following coverages: Primary, Excess, Commercial and Personal.

 5% - 30%

ASL 22 Aircraft (All Perils) Insurance.

The commission ranges set forth below are applicable to all Aircraft All Perils Insurance Policies, which may include the following coverages: Hull, Liability and Satellite Business.

 2% - 18%

ASL 23 Fidelity Insurance.

The commission ranges set forth below are applicable to all Fidelity Insurance Policies, which may include the following coverages: Crime, Excess Crime, Bond, and Employee Dishonesty.

 3% - 31%

ASL 24 Surety.

The commission ranges set forth below are applicable to all Surety Bonds, which may include the following types: Conventional, Contract and Court Bond.

 3% - 48%

ASL 26 Burglary and Theft Insurance.

The commission ranges set forth below are applicable to all Burglary and Theft Insurance Policies, which may include the following coverages: Crime and Excess Crime.

 4% - 25%

ASL 27 Boiler and Machinery Insurance.

The commission ranges set forth below are applicable to all Boiler and Machinery Insurance Policies, which may include the following coverages: Machinery and Equipment Breakdown.

 5% - 24%

ASL 28 Credit (e.g., Trade Credit).

 15%-20%