Liberty Mutual Insurance Producer Compensation Disclosure
Liberty Mutual Insurance subsidiaries (together, "Liberty Mutual") sell and service insurance products through multiple channels. Customers may purchase insurance directly from Liberty Mutual through online or phone-based sales, through licensed Liberty Mutual employees, or through independent insurance agents and brokers ("producers").
This disclosure explains how Liberty Mutual compensates independent producers when a customer chooses to purchase or service an insurance policy through an agent or broker. The compensation practices described below apply only when an independent producer is involved in the sale or servicing of a policy.
Independent Producers and Compensation
Independent producers are not employees of Liberty Mutual When a customer purchases insurance through an independent producer, Liberty Mutual compensates that producer for placing insurance with us and providing certain services to our customers. Additional information about producer compensation also may be available directly from your producer.
Licensed Liberty Mutual employees and direct-to-consumer sales channels are compensated differently and do not receive producer commissions.
Producer Compensation
Liberty Mutual designs its producer compensation system to encourage producers to sell Liberty Mutual products, assist in evaluating risks and servicing accounts, and retain profitable business. Producer compensation generally falls into three basic categories:
- Commission
- Contingent compensation
- Additional incentives
Producers may receive some or all forms of these payments, depending on the producer's business relationship with Liberty Mutual.
Commission
Liberty Mutual pays producers a base commission for each insurance policy they sell. This commission is paid on new and renewal policies.
This commission is a percentage of the premium charged to the insured for the policy. The amount of the commission depends on the type of insurance product or coverage sold, risk classification, producer size, the state where the risk is located, or the services provided to the policyholder. Liberty Mutual offers a wide variety of insurance products and therefore pays a wide range of commissions. For the majority of products, Liberty Mutual pays producers a base commission in the range of 8% to 15%, although the commission may be higher for some products.
Producers may charge their customers a fee related to services they provide. Any such fee would be in addition to receiving a commission from Liberty Mutual.
In certain transactions, more than one producer may be involved in placing insurance coverage with Liberty Mutual. If more than one producer is involved, both producers may receive a commission or, more often, the commission is split between the producers.
Contingent Compensation
In addition to base commissions, producers also may be eligible to receive contingent compensation equal to a percentage of the premium a producer has placed with Liberty Mutual for a specific type of insurance. This form of compensation is contingent on various factors, such as the producer's ability to meet pre-established goals for profitability, retention, and sales volume during a particular year.
If a producer does not meet the pre-established goals for the year, the producer is not eligible to receive the contingent compensation.
Additional Incentives and Benefits
From time to time, Liberty Mutual may provide producers or their employees the opportunity to receive additional compensation for placing specific types of policies, helping pursue new business opportunities with their customers, or performing other services. This additional incentive may take the form of a sales contest in which cash, trips, or other prizes are awarded, or it may take the form of additional commission. These incentives are designed to promote the placement of business with Liberty Mutual.
Liberty Mutual may also reimburse certain producer expenses related to marketing activities. This may include advertising materials, training expenses, or goods and services that help promote Liberty Mutual and its products. Liberty Mutual also may pay for business meals and provide other entertainment for producers.
From time to time, Liberty Mutual may give producers complimentary items of nominal value. These items are generally not based on profitability or growth and are typically marketing items intended to promote new products and programs.
Liberty Mutual also may pay compensation to entitles that endorse Liberty Mutual and promote the sale of its products and services.
Ownership Interests
Liberty Mutual owns and operates insurance agencies through which it sells insurance using licensed employees. These agencies are separate from independent producers and do not operate under independent producer compensation arrangements.
Other Important Information
This overview provides general information about how Liberty Mutual currently compensates independent producers. Because this is an overview, there are exceptions not addressed within the scope of this disclosure, and compensation programs may change from time to time.
If you would like additional information about a commission paid on your policy, please contact your producer. Please also check this website periodically for updated information on this subject.