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Tuesday, 21 October 2014 18:00

Commission Disclosures and Broker Transparency

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When a group insurance policy is obtained, your insurance broker is paid a commission on each line of coverage.  But did you know that there is a law that requires a broker to disclose the total amount of compensation they receive from your insurance carriers? 

In 2009 a Colorado state law was established requiring insurance brokers to notify their clients about the standard compensation earned from the policies that make up their employee benefits package. Standard Compensation includes a flat dollar amount or percentage commission the insurance company pays the broker for selling their insurance policy.  

  • This type of compensation MUST be disclosed after a new policy is selected by the client and coverage begins
  • A disclosure notification must be mailed, hand delivered by the broker or emailed to the client
  • The broker will keep a copy of the disclosure for the current calendar year and two years prior

Standard compensation does not include renewal commissions. Disclosures are only required at new sale or upon moving to a new carrier. Fall River sends a Commission Disclosure to all of our clients every single year, exceeding the transparency required by the law.  If your broker is not disclosing commissions at all, we encourage you to ask him or her for more information. 

There is another type of compensation that does not have to be disclosed. This is contingent compensation, which carriers pay based on the overall size or retention rate of a broker’s book of business. For many brokers, especially large firms where bonuses are a much higher portion of revenue, this type of compensation can comprise a significant portion of the broker’s income.  For some firms, this additional revenue appears to be a driving force to recommend certain carriers over others.

Fall River always puts the client’s needs first and considers the carrier that fits our client’s goals the best, regardless of any bonuses we might receive.  Our number one value is integrity, and our commission will never take priority over our client’s best interest.  Our number one value is integrity, and our commission will never take priority over our client’s best interest.

Read 8260 times Last modified on Monday, 14 September 2020 20:23
Amy De Lorenzo

Amy Johnston is an Account Manager with extensive experience working with both large and small employers as a broker.  In addition to five years of broker experience prior to joining Fall River, she also brings eight years of insurance carrier expertise.  Amy is an expert on ERISA, the Affordable Care Act, and other compliance issues.

Ms. Johnston received a Bachelor of Arts degree in Communications from Colorado State University. She is a Colorado native from Steamboat Springs, and loves spending time in the mountains with her husband, two children, and Tucker the cocker spaniel. She enjoys snowshoeing, hiking, and philanthropy work to promote education.