Broker and Independent Agent Compensation
AIG Commercial and Personal Insurance companies compensate insurance brokers and independent insurance agents through commissions of either a specific dollar amount or a percentage of premium set at the time of each purchase, renewal, placement or servicing of a particular insurance policy. Beginning in 2011 amendments to the settlement between AIG and the New York Attorney General allowed AIG greater flexibility concerning payment of compensation to insurance producers in addition to commissions negotiated at the time of individual insurance transactions. From time to time, AIG Commercial and Personal Insurance may enter into agreements with producers to provide additional commission not contingent in nature. All such payments are subject to controls administered by AIG Commercial and Personal Insurance Legal, Compliance and business management.
AIG Commercial and Personal Insurance companies may also pay contingent compensation to insurance brokers and independent insurance agents. Contingent compensation may be paid in addition to commissions of a specific dollar amount or a percentage of premium set at the time of a purchase, renewal, placement or servicing of a particular insurance policy. Beginning in 2011 amendments to the settlement between AIG and the New York Attorney General allowed AIG greater flexibility concerning payment of compensation to insurance producers, including contingent compensation in addition to commission. Contingent compensation is typically based on criteria such as the volume of new sales, overall production volume, persistency, or overall profitability of the policies placed by an insurance broker or independent insurance agent. All such payments are subject to controls administered by AIG Commercial and Personal Insurance Legal, Compliance and business management.
AIG Commercial and Personal Insurance companies may also have reimbursed certain expenses of insurance brokers and independent insurance agents that place personal lines business and insurance producers that act as program administrators, including but not limited to, advertising and marketing expenses, costs of software and systems upgrades, loss control services and certain other underwriting and/or claims expenses. They may also have provided insurance brokers and/or their employees the opportunity to receive additional incentive compensation for placing certain types of policies. This incentive compensation has been both in the form of sales contests where cash or other prizes were awarded and in the form of additional commissions. Beginning in 2011 amendments to the settlement between AIG and the New York Attorney General allowed AIG greater flexibility concerning payment of compensation to insurance producers, including non-contingent compensation in addition to commission and contingent compensation. AIG may also enter into agreements to access information feeds or cause strategic interaction to facilitate business in exchange for a fee. Outside of specific insurance transactions, AIG may also obtain services for which it pays a fee. All such payments are subject to controls administered by AIG Commercial and Personal Insurance Legal, Compliance and business management.