Managing Conflicts Of Interest
The Canadian Council of Insurance Regulators (CCIR) after public consultations agreed on three principles as best practices in managing actual or potential conflicts of interest. The principles promote consumer confidence in the insurance industry by outlining best practices for managing these situations when they arise.
The principles are:
- The client’s interests come first: Distributors must put the interests of policyholders and purchasers ahead of their own;
- Make clear any conflicts or potential conflicts of interest: Consumers must receive disclosure of any actual or potential conflict of interest that is associated with a transaction or recommendation; and
- Ensure products are the right fit: Products recommended must meet the needs of the consumer.
Our Company supports these principles. If you feel that our representatives are not following them, please let us know. The Financial Services Commission of Ontario regulates insurance companies and agents in Ontario.
Disclosure of Distributor Compensation & Financial Links
Lambton Mutual Insurance Company offers property and casualty insurance products through a combination of independent brokers and exclusive agents (agents who act only for Lambton Mutual). A fundamental requirement of the contract of insurance is that both parties (you and us) act in utmost good faith at all times. Further, our distributors must act with honesty, integrity and hold themselves to a high ethical standard in their dealings with both the customer and the insurer.
Our distributor agreements govern how and when they will be compensated for business placed with Lambton Mutual. We compensate our distributors in two ways: Firstly, we pay a fixed rate of commission expressed as a percentage and based on the annual policy premium. The rate of commission varies depending on the line of business as illustrated in the table below.
Secondly, we offer a contingent profit commission program that rewards the efforts of those distributors who write a profitable book of business. Lambton Mutual’s contingent profit commission is potentially payable after the end of a year and it is based on specific criteria that recognize the profitability of a distributor over a three-year period. Profitability is measured by comparing premium revenue against expenses (e.g. Claim costs, commission expense, reinsurance costs, etc.). For the year 2016, we paid profit commissions equal to 1.28% of our total written premium. Lambton Mutual Insurance Company does not have financing arrangements with any of its distributors.
As a mutual insurance company, we are owned by our policyholders and do not have shareholders. As such, any profit is either reinvested back into the company, or, from time to time, may be returned to our policyholders. Lambton Mutual is dedicated to providing high quality insurance products at cost to our policyholders through prudent management practices, effective underwriting and loss prevention measures.
Commission rates by Line of Business:
- Automobile 12.5%
- Property 15%-20%
- Liability 15%-20%
Percentage of Gross Written Premiums by Line of Business for 2016:
- Automobile 47.4%
- Property 44.3%
- Liability 8.3%