N.Y. Comp. Codes R. & Regs. tit. 11 § 105.3

Current through Register Vol. 46, No. 53, December 31, 2024

Section 105.3 - Commissions and brokerage

(a)Direct.

Include:

All payments, reimbursements and allowances, on direct writings, computed as a percentage of premiums for production, management or other services to:

managers

supervising general agents

general agents

regional and district agents

local agents

office agents

brokers

solicitors

other producers and agents

Commissions and brokerage to employees when the activities for which the commissions are paid are not a part of their duties as employees.

Exclude:

Compensation to employees except as noted above (see salaries).

Allowances, reimbursements and payments not computed as a percentage of premiums (see allowances to managers and agents).

Expenses involved in transactions between insurance companies (see joint expenses; commission and brokerage-reinsurance assumed and ceded; expenses for account of another; and income from special services).

Contingent commissions (see commission and brokerage-contingent).

Fees of investment counsel (see legal and auditing).

Expenses includible in boards, bureaus and associations.

Taxes on premiums (see taxes, licenses and fees).

Commission received for special services such as loss adjustment and inspection not related to policies issued by the company (see income from special services).

(b)Reinsurance assumed.

(1) Commission and allowances of every nature on reinsurance assumed including tax and board allowances and reinsurance brokerage, except contingent commission, shall be included in "commission and brokerage-reinsurance assumed."

(2) Exception.

Where commission and allowances under reinsurance assumed take the form of accurate proportions of actual expenses incurred, as in some quota share and pooling agreement, entries shall be made to the actual expenses.

(c)Reinsurance ceded.

(1) Commission and allowances of every nature on reinsurance ceded including tax and board allowances and reinsurance brokerage, except contingent commission, shall be included in "commission and brokerage-reinsurance ceded."

(2) Exception.

Where commission and allowances under reinsurance ceded take the form of accurate proportions of actual expenses incurred, as in some quota and pooling agreements, entries shall be made to the actual expenses.

(d)Examples relating to the treatment of commission on reinsurance assumed and reinsurance ceded.

(1) Company A cedes business to Company B under a treaty specifying a commission of 35 percent and an allowance for taxes and board fees of five percent. On the statement filed by Company A, both the 35 percent and the five percent shall be entered in "commission and brokerage-reinsurance ceded." On the statement filed by Company B, both the 35 percent and the five percent shall be entered in "commission and brokerage-reinsurance assumed."

(2) Company A cedes 10 percent of all its business to Company B under an agreement whereby Company B pays 10 percent of all actual expenses, on such business, incurred by Company A. Assume the expenses of Company A on the business reinsured as follows:

Paid on written business
Commission and brokerage-direct .......	$100,000
Salaries and related items .......	30,000
Rent items rent items .......	7,000
Printing and stationery .......	7,000
Postage, etc. .......	5,000
Surveys and underwriting reports .......	8,000
Total .......	$157,000

Note:

These are not intended to show the complete list of expenses involved but are given only for illustrative purposes.

(3) On the statement filed by Company A the commission and allowances by Company B shall be credited as follows:

Paid on written business
Commission and brokerage-reinsurance ceded .......	$10,000
Salaries and related items .......	3,000
Rent and rent items .......	700
Printing and stationery .......	700
Postage, etc. .......	500
Surveys and underwriting reports .......	800
Total .......	$15,700

(4) On the statement filed by Company B the commission and allowances made to Company A shall be debited as follows:

Paid on written business
Commission and brokerage-reinsurance assumed .......	$10,000
Salaries and related items .......	3,000
Rent and rent items .......	700
Printing and stationery .......	700
Postage, etc. .......	500
Surveys and underwriting reports .......	800
Total .......	$15,700

(e)Contingent-direct.

Include:

Contingent or profit commission paid.

Contingent or profit commission received.

Contingent commission to employees when the activities for which the contingent commission is paid are not a part of their duties as employees.

(f) Contingent reinsurance assumed.

(g)Continent reinsurance ceded.

(h)Policy and membership fees.

Include:

Policy and membership fees retained by, or paid to, agents.

Policy and membership fees to employees when the activities for which the policy and membership fees are paid are not a part of their duties as employees.

N.Y. Comp. Codes R. & Regs. Tit. 11 § 105.3