How We Get Paid

Gifford Associates takes pride in the services our brokerage provides to you, our client, for insurance and risk management programs. For our efforts we are compensated in a variety of ways, primarily in the form of commissions and contingency amounts paid by insurance companies and in some cases, fees paid by clients or third parties. The means by which we are compensated are described below.

Commission Income – Commission, normally calculated as a percentage of the premium paid to the insurer for the specific policy, is paid to us by the insurer to distribute and service your insurance policy. Our commission is included in the premium paid by you. The individuals at Gifford Associates who place and service your insurance may be paid compensation that varies directly with the commissions we receive.

Contingency Income – We also receive income through contingency arrangements with most insurers. They are called “contingent” because to qualify for payment we normally need to meet certain criteria, usually measured on an annual basis. Contingency arrangements vary, but payment under these agreements is normally the result of growing the business by attracting new customers, helping the insurance company gather and assess underwriting information and/or working to renew the policies of existing insureds. There is currently no meaningful method to determine the exact impact that any particular insurance policy has on contingency arrangements. However, better brokers tend to receive higher contingency payments because they do a better job of growing their business and retaining clients through better service. In other words, the amount of earned contingency income depends on the overall size and/or profitability of all a group of accounts, as opposed to the placement or profitability of any particular insurance policy. For this reason, the individuals involved in placing or servicing insurance are rarely, if ever, compensated directly for contingent income that we receive. Over the last five years, our contingent income has averaged less than 2% of premiums.

Supplemental Commissions – Some insurance companies have recently replaced contingent commissions with supplemental commissions. These commissions, in fixed amounts, are established annually in advance based on historical performance measured by criteria comparable to those by which contingent commissions are calculated.

Fees paid by clients – On occasion, with more complex business insurance programs and where additional resources, products or services are appropriate, a fee may be negotiated for placement of insurance coverage or additional services. Fees charged for the placement of insurance will be outlined in a proposal and approved, usually in writing, prior to the insurer binding coverage. In certain circumstances clients pay us mutually agreed-upon fees for additional services, such as third party administration of employee benefits or workers’ compensation programs.

Other Compensation and Benefits – We may receive revenue or further benefits from our insurance brokerage activities in other ways, including but not limited to, from insurance company promotional events, fees or a percentage of the interest paid to us for the administration of premium finance contracts, interest paid to us by financial institutions earned on fiduciary or trust accounts in which we hold your premium payments pending remittance to the insurance company, and fees paid to us for policy and/or claims administration and/or loss control services that we provide.

Our goal is to be your insurance brokerage of choice. We know you have many brokerages to choose from, so to earn your confidence, we hold ourselves to the highest standard of service.

Please also feel free to ask any questions about our compensation generally, or as to your specific insurance proposal or placement, by contacting your Gifford Associates broker or customer service representative directly.