To our valued Clients and Prospective Clients:
Ontario Insurance Regulations requires all clients working with licensed insurance brokers to be provided a disclosure document outlining the method by which their broker is compensated plus any conflicts of interest that may exist. The insurance companies trade association (CLHIA) has indicated that they will also provide directly to our clients, the actual amount of compensation that is paid to us. While we do not agree with this approach or delivery method, because it fails to show the information in context, we do agree that clients should be aware of how we are compensated and as such, have started to share this information with our clients/prospects.
Human Capital Benefits Inc. does not have any conflicts of interest. We do not have an ownership in any of the firms we deal with (beyond mutual fund investments) nor are we provided any financial support (loans etc.) from our suppliers.
Human Capital Benefits is compensated by a portion of your premium costs for designing, marketing and facilitating the placement of and the continued service of your benefit plan. This includes: commissions; bonuses; and in some cases, other inducements and rewards. Some Insurers offer additional incentives such as travel incentive rewards in recognition of sales made, but Human Capital does not accept this type of reward.
Human Capital Benefits Inc. is an independent insurance advisory that specializes in employee benefits, capital accumulation plans and personal and corporate insurance. Our goal with our benefit clients is to help your firm obtain a competitive benefits package for the organization and its member stakeholders. In doing so, we consider factors including: the initial, long term and overall stability of pricing; plan design; customer service and organizational fit. We strive to provide the highest levels of customer service to our clients we can. Our proactive service approach is delivered through comprehensive training of plan administrators and an administrative approach designed to minimize employer liability.
Human Capital Benefits uses two back office resources in GroupQuest Benefits Resources Inc. and Group Force Benefits Inc. to provide more efficient support in the administration of your plan. They are paid additional fees directly from the providers. Typically, an amount equal to 1% – 3% of premium may be paid by the Insurer, directly to these back-office resources (Managing General Agencies or MGA’s) and does not directly affect premium rates as these organizations manage administrative and oversight functions that can streamline client engagement and servicing for the Insurer. In other cases, the MGA override, (up to approximately 2% of premium) is deducted from your target loss ratio and paid to the MGA, sometimes resulting in a slight premium adjustment. Each Insurers compensation model is different and in the case of the large Insurers, they normally build this operational cost of the MGA into their retention cost models.
The amount of commission we earn may be paid by a variety of methods. In some case; as a percentage of the annualized premium – paid in advance; on an “as earned” basis; or a combination of both. If your plan undergoes significant changes or terminates before the end of the policy year, commission advances will be charged back to our firm by the Insurer.
As an Independent insurance advisory in Ontario, we are bound by the laws that govern life insurance agents. The Insurance products we recommend are the ones we believe are best suited to meet your needs without regard to the compensation practices of any one company. Human Capital Benefits, as a brokerage, deals with several Insurance Providers, rather than an agent, who typically only places business with one. Currently, we are contracted to represent and provide product solutions from the following companies:
- Desjardins Financial
- Empire Life
- Great-West Life
- Industrial Alliance
- Manulife Financial
- Medavie Blue Cross
- RBC Insurance
- RWAM Group Insurance
- Sun Life
- The Benefits Trust
In addition, some Third-Party Administrators (TPA’s) that we work with, may use the following Insurers to provide or re-insure their services:
- ACE INA Life
- AXA Insurance
- Green Shield Canada
- Industrial Alliance
- La Capitale Insurance
- SSQ insurance
- The Co-Operators
From time to time, we may obtain pricing from other Insurers and benefit providers for comparative purposes.
The commission paid to Human Capital Benefits for employee benefits is based on your annualized paid premium. The compensation we charge is 4% for Health Spending Accounts and 4% – 12.5% for most group benefit plans; depending on size. These commissions are aligned with property insurance brokers who charge 15% – 20%, auto insurance brokers that receive 10% -12.5% and are much lower than commercial business insurance advisors that earn up to 30% in commissionable premium.
As noted above, the commission rate can be set as a flat percentage of premium or as a declining scale (formerly referred to as the Crown scale). Actually, referring to a company that has been out of business for over 20 years. This “Crown Scale” indicated in the table below pays a decreasing percentage of commission to the advisor as the annual premium grows. This scale has fallen out of favor as it is difficult to explain and no longer reflects the input of time, education, and servicing required to manage todays more sophisticated plans and members in this highly regulated marketplace.
Whenever possible, Human Capital Benefits has moved to the flat scale based on a percentage of annual premium. Unless contracted on a fee for service basis, or fee offset, you will receive no billings or invoices from our firm. Our Standard Group Life/Health and Retirement compensation is outlined in the table below:
OLD Crown Schedule
Life and Health
Long Term Disability
All premium 15%
Standard Retirement Compensation Schedule
|Plan Assets||Cash Flow||Assets||Transfers|
|< 2 Million||2%||0.35%||1%|
|> 2 Million||1%||0.25%||0.5%|
|Annual Premium||Flat %|
|$750K to $1M||3.0%|
|$500K to $749K||4.0%|
|$250K to $499K||5.0%|
|$125K to $249K||6.0%|
|$75K to $124K||7.0%|
|$0 to $74K||8.0% – 10%|