Broker Compensation And Financing
Information about broker compensation and financing by Northbridge General Insurance Corporation and Northbridge Personal Insurance Corporation (the “Northbridge Companies”).
How we conduct business
Northbridge General Insurance Corporation sells commercial insurance exclusively through independent brokers. Northbridge Personal Insurance Corporation sells personal insurance through independent brokers. When a customer purchases our products through an independent broker, that broker acts on behalf of the customer, providing professional advice and the choice of insurance products offered by a number of insurance companies, not just the Northbridge Companies. We take great care to ensure that the brokers with whom we conduct business are highly skilled insurance professionals.
Broker compensation
Commissions
Brokers earn their commission out of the insurance premium you pay. Commissions paid on policies issued by the Northbridge Companies are calculated at a fixed percentage of the premium. The range of commissions paid varies by the type of business, as described in the chart below:
Broker commission schedule
| Personal insurance: | Maximum rate: |
| Private Passenger Automobile | 12.5% |
| Personal Household & Property | 20.0% |
| Personal Umbrella Liability | 20.0% |
| Commercial insurance: | Maximum rate: |
| Commercial Automobile | 7.5% to 12.5% |
| Commercial Property | 20.0% |
| Commercial General Liability | 20.0% |
| Commercial Umbrella | 15.0% |
| Commercial Umbrella Package | 20.0% |
| US Domiciled Property | 15.0% |
| Property Excess | 15.0% |
| Liability Excess | 15.0% |
| Earthquake Only or Flood and Earthquake Only (where not included as part of a package premium) |
15.0% |
| Marine | 15.0% |
| Wrap Up | 15.0% |
| Errors & Omissions | 20.0% |
| Directors & Officers | 20.0% |
| Cyber | 20.0% |
Contingent profit commissions
In addition, your broker may be paid an annual contingent profit commission. These payments are based on the total book of business the broker places with the Northbridge Companies rather than on the premiums of your individual policy. Profit commissions are paid to the broker only if that entire book of business earns a profit in that year. If the book of business is profitable, the amount we pay will also take into account the amount of business placed with us by that broker. The total contingent profit commission paid annually by Northbridge is on average 1 to 2% of the companies’ gross written premium for the year.
Reimbursement of costs of other services by brokers
Some brokers provide additional services or activities such as advertising, underwriting, data entry, claims processing and administration. The Northbridge Companies may reimburse these brokers for the cost of providing these services on our behalf.
Broker financing
Many Insurance Brokerages are small to medium sized owner-operated businesses – one of the last bastions of the owner-operated enterprise in this country. Succession or perpetuation planning has always been a challenge for these owner-operated businesses. It has been a long standing tradition for the Northbridge Companies to work with brokers to ensure the perpetuation of their businesses so that they can retire and the next generation can take over the brokerage and provide ongoing service to their customers.
From time to time, Northbridge provides assistance in the form of debt and/or equity financing to help our brokers accomplish their perpetuation plan. Brokers who are being assisted are not required to steer insurance business our way when it conflicts with the interest of the customer.
Portfolio Transfers
From time to time, brokers review their insurance providers to ensure they have the right ones to meet your needs. Sometimes, brokers can choose to change insurance companies, when they feel a company offers their clients a better value proposition.
Our practice is to support independent brokers in transferring clients to the Northbridge Companies through training, technology and financial support.
