Compensation Disclosure

The Novick Group is an independent insurance broker specializing in providing comprehensive and cost-effective insurance and risk management services to the nonprofit and association community. This disclosure notice is intended to identify the various methods by which we are compensated and how these compensation methods are determined.

Industry Compensation Methods Described

As a practical matter broker (agent) compensation falls into one of three categories: commission, contingency payments and fees. In some circumstances, broker compensation may be a combination of commission and fee based revenue.

Commission
The principal source of revenue for most insurance brokers result from a commission paid by insurance carriers based on the type of coverage and amount of premium. Commission expense is built into the premium charged by the carrier and paid by an insured. Whether premiums are remitted directly to the carrier or to the broker, who in turn remits a net payment to the carrier, the earned commission is a specific percentage of premium. Agreements between brokers and carriers vary so certain brokers may earn a higher rate of commission than others.

Contingents
Often referred to as "contingencies" or "profit sharing" these fees are based on the performance of the broker's "book of business" with the carrier during any given year. Year-end reconciliation takes into account premium growth and retention with loss experience (not of a single client but the book of business overall) often being the most sensitive factor in determining the amount of contingent (profit sharing) compensation. Such agreements are fairly commonplace among agents & brokers.

Fees
Some agencies bill service fees in addition to commission income, however many states do not permit this practice. As an alternative to commission compensation, fee based agreements negotiated between the insured and broker are becoming more commonplace among medium to large commercial insureds. Fees associated exclusively with non-commission service items such as loss control and claims analysis are also routine.

Novick Group Compensation

Carrier paid commission is the principal source of revenue, accounting each year for approximately 85% of agency operating income. Contingency fees (profit sharing agreements) vary from year to year but generally account for about 10% of agency revenue. Consulting and miscellaneous fees make up the balance. We participate in contingency agreements with the following carriers:

  • St. Paul/Travelers
  • Chubb
  • Hartford

Our Commitment To You

We assure every client and every prospective client that our decisions with respect to placement of your insurance have always been and will continue to be guided by the best interests of our clients.

If you have any questions or if you would like additional information about any aspect of the compensation we earn on your account, please contact your client service representative.