Sep. 05, 2010

 
Consumer Rights

Oxford Mutual is your company, owned by you, and we are committed to serving you with professionalism and integrity. The Insurance Industry recently demonstrated its commitment to keeping consumers fully informed - we have nothing to hide. Included in the package containing this newsletter, you will find the full wording of the Code Of Consumer Rights and Responsibilities to which we subscribe and fully support.

In keeping with this Code, we feel that you have the right to know how our distributors are compensated. Oxford Mutual distributes its insurance products through licensed agents (distribute only Oxford Mutual products) and brokers (distribute Oxford Mutual's products along with others). These agents and brokers are located throughout our area of operation. We consider this to be the most effective method of distribution. Our agents and brokers live in the communities that Oxford Mutual serves and we believe they provide the best possible service and advice to our policyholders. We are very proud of these individuals. Our agents and brokers are compensated for the services they provide by means of a commission schedule, which is included in our contractual agreement. The schedule is as follows:

  • Auto Policies: 7.5% or 10% of the premium.
  • Farm Policies: 15% or 20% of the premium.
  • Residential Policies: 20% or 22.5% of the premium.
  • Commercial Policies: 18% of the premium
  • Contingent Profit Commission: This agreement is available to some of our distributors to recognize the contribution of the individual agent or broker's policyholders to the profitability of all policyholders. The formula used takes into account:
    • The premiums generated from business written by the agent/broker.
    • The cumulative 3-year average experience for claims generated from business written by the agent/broker including adjusting costs.
    • The operating expenses, including reinsurance costs, allocated to the agent/broker.
If the calculation generates a profit, a portion of that profit is paid to the agent/broker, if no profit is generated no payment is made. The amount payable under the Contingent Profit Commission is capped at 1% of the premium writings for the agent or broker.

Total commissions paid to distributors for 2006 were $1,209,857 ($1,154,537 in 2005). This represents 13.5% of Written Premium for 2006 (12.6% in 2005).