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How Apex Insurance Advisors, LLC Is Compensated
Apex Insurance Advisors, LLC (Apex) provides insurance brokerage, advisory, and related services to its clients. Apex may receive compensation from insurance carriers, clients, and, in certain circumstances, other parties. The type and amount of compensation may vary based on the services provided, the insurance products placed, and the arrangements involved in a particular transaction. The following explains the principal ways Apex may be compensated.
Carrier Commissions
When Apex places or services an insurance policy, the issuing insurance carrier may pay Apex a commission. Commissions are generally calculated as a percentage of the policy premium, although the calculation may vary by carrier, coverage, and product. The commission is ordinarily included in the premium paid by the client. Compensation paid to Apex employees involved in placing or servicing coverage may be influenced, in part, by the commissions Apex receives.
Contingent Compensation
Apex may participate in contingent compensation arrangements offered by certain insurance carriers. Unlike the commission associated with an individual policy, contingent compensation is generally determined by evaluating Apex’s performance against the carrier’s criteria over a specified period, often annually.
The criteria differ among carriers and may include factors such as overall premium volume, new business production, policy retention, the quality and completeness of underwriting information, and the loss or claims experience of a portfolio of business.
Because contingent compensation is based on the performance of a group of accounts, it is generally not possible to attribute a specific amount of that compensation to any one client or policy. Eligibility for and the amount of contingent compensation depend on the aggregate size, composition, and/or profitability of the applicable book of business, rather than solely on the placement or performance of an individual account. Employees who place or service a particular policy are therefore rarely, if ever, compensated directly based on the contingent compensation Apex receives in connection with the broader portfolio.
Supplemental Compensation
Some carriers use supplemental compensation programs instead of, or in addition to, traditional contingent arrangements. These programs may provide Apex with a fixed amount for a particular period. The amount is commonly based on prior performance and on criteria similar to those used in contingent compensation programs. Such payments may also be referred to as guaranteed supplemental commissions.
Fees Paid by Clients
For complex insurance programs or engagements requiring additional services or resources, Apex may charge a client an agreed-upon fee. Any fee for the placement of insurance or for related services will generally be described in a proposal or other written agreement and approved before coverage is bound, or the applicable services are performed.
In some circumstances, Apex may receive both a carrier commission and a client-paid fee. When applicable, this arrangement will generally be disclosed to the client in advance. Apex may also charge separately negotiated fees for services beyond the placement of insurance, including services such as third-party administration of employee benefits or workers’ compensation programs.
Wholesale Brokers and Other Intermediaries
Certain risks, products, or coverage needs may require Apex to work with a wholesale broker, managing general agent, or another insurance intermediary. These intermediaries provide access to insurance markets or specialized products that may not be available through standard retail brokerage channels.
When an intermediary participates in a placement, both Apex and the intermediary may receive compensation. The intermediary may be affiliated with Apex or may be independently owned. Unless otherwise disclosed, the use of an intermediary generally does not change the premium charged to the client.
Data and Carrier-Related Services
In the course of serving clients, Apex may collect and analyze information concerning client insurance needs and current or anticipated insurance-market conditions. Subject to applicable law and Apex’s privacy practices, Apex may provide aggregated or de-identified information to insurance carriers in connection with consulting or other service arrangements. This information may help carriers evaluate market needs and develop or refine their products. Apex may receive fees for providing such services.
Other Forms of Compensation or Benefits
Apex may receive additional revenue or non-cash benefits in connection with its insurance activities. These may include support for carrier-sponsored promotional activities; payments related to marketing, education or employee training; fees or a share of interest associated with the administration of premium-finance arrangements; interest earned on funds held temporarily in fiduciary or trust accounts before remittance to an insurance carrier; and fees for policy administration, claims administration, loss-control services or similar services.
Preferred or Strategic Carrier Relationships
Apex may maintain focused relationships with a selected group of national, regional or specialty insurance carriers. These relationships are intended to support access to coverage, service, competitive products and stable market capacity. Apex will continue to consider other carriers when appropriate for a client’s needs, but a client’s coverage may be placed with one of Apex’s preferred or strategic carriers.
A strategic carrier may pay Apex additional or enhanced compensation. Apex may use that compensation to support service improvements, technology, training, or other initiatives designed to enhance the client experience. Apex may also use a portion of such compensation in employee incentive programs that encourage employees to evaluate and, when appropriate, access the products and services offered by strategic carriers. Any such activity is intended to occur while Apex continues to consider the client’s insurance requirements.
In limited circumstances, an Apex employee may serve on an advisory board, committee, or similar body for an insurance carrier with which Apex does business.
Our Commitment to Clients
Apex Insurance Advisors, LLC is committed to providing professional service and helping clients make informed insurance decisions. Clients are encouraged to ask questions about the compensation Apex may receive in connection with a particular recommendation, proposal, policy placement or service.
For additional information, please contact your Apex Insurance Advisors, LLC representative or reach us at info@apexinsuranceadvisor.com
