COSECO consumer disclosure: compensation to insurance intermediaries

HB Group Insurance Management Ltd., (HB) and COSECO Insurance Company (COSECO) are wholly owned subsidiaries within The Co-operators Group Limited where HB has a financial relationship with the insurer, COSECO Insurance Company.

COSECO Insurance Company is HB's principal insurer. HB is COSECO's sole Managing General Agent (MGA). COSECO outsources all business functions to HB and in turn HB receives a flat commission of 18% as MGA.

HB also manages relationships with other brokers and insurers on a very limited basis. Compensation for frontline HB employees or Licensed Insurance Representatives (LIRs) is predominantly salary based with a small bonus component for acquiring new business. The bonus amount is based on the volume of sales per LIR and is tied to the adherence to our pricing and underwriting rules.

Ownership and other financing links to intermediaries

Ownership and Loans

From time to time, members of The Co-operators Group Limited have provided financial support, in the form of equity investments or loans, to a small number of brokers for the purposes of succession continuity and business expansion, none of which have any business relationship with COSECO. Our strategic direction is to reduce these positions over time.

We expect these arrangements would in no way impact the advice given to customers, but we are committed to having these brokers disclose any financial arrangements to their clients.

Subsidiary Companies

The Co-operators Group Ltd. also has three wholly-owned subsidiary companies that act as intermediaries for specific client needs.

HB Group Insurance Management Ltd. (HB) offers automobile and property insurance programs, mainly to employer-sponsored groups, professional associations and affinity groups. These programs are marketed under the brands The Co-operators and COSECO Insurance Company in English Canada or Co-operators in Quebec. HB also administers the Credit Union Insurance Services (CUIS) home and auto Insurance Program.

Federated Agencies Limited and Unified Insurance Brokers Limited support The Co-operators by providing access to a range of insurance and financial service products not manufactured by The Co-operators.

In addition, The Co-operators is a 50% partner in the ownership of a marine underwriting manager, Harlock Murray Underwriting Limited.