About Us

Income Disclosure

Thoits Insurance is compensated for the services it provides to insureds by negotiated client fees and insurance company commissions paid from premiums. Thoits may also receive compensation from insurance companies based upon volume and profitability of the total book of business. Clients who wish additional information should contact their Thoits client executive.

Thoits letter on contingent compensation:

October 29, 2004

Dear Client:

The New York Attorney General, Eliot Spitzer, in a Civil Complaint released earlier this month, charged that Marsh & McLennan, the nation’s largest insurance broker, had received “kickbacks” from insurers for steering business to them and had arranged phony bids in order to direct business to selected insurers. The overriding premise of the complaint charged that Marsh had breached its responsibility to do what was in the best interest of its customers.

The Attorney General has suggested that this investigation will widen and that there are other publicly-traded insurance brokers and insurers that may have participated in similar unethical and/or illegal behavior. At this point, we do not know whether these allegations are true or not. If they are true, they represent behavior that is indefensible. The customer’s interest was not put first.

Although the inquiry will be expanded and it may be found that other insurance brokers have participated in some of these practices, we do not anticipate that this will be shown to be an industry-wide problem. Most insurance agents and brokers put their customers’ interest first and don’t engage in unethical or illegal acts. This is absolutely the case for Thoits Insurance.

The most important asset we have is our reputation. Our relationship with our customers – with you – is built on trust. To properly serve you, we have to do what we have committed to do and we have to treat you as we would be treated ourselves.

We commit to do the following:

  • If we put your insurance out to bid, every insurer that we mutually agree to approach will be encouraged and expected to submit as competitive a bid as they are able. If we are open to criticism, it is from the insurers we represent for pushing them too hard and asking a lot of them.
  • The final selection of insurers will be yours. When we make recommendations to you, they will be based on what we believe will be best for you, not best for us. Specifically, we consider financial security, coverage, service, and price.
  • If you would like us to share with you how much compensation we are receiving on your account from all sources, we gladly will share that information with you. We have to earn our compensation and are confident that we consistently do so.
  • If we charge you a set fee, we will disclose any other sources of income that we receive. In most cases, when we charge a set fee for our services, there is no other compensation that we receive.
  • The vast majority of our standard insurers have some type of contingent compensation agreement. Every successful agency and brokerage of any stature is awarded numerous such incentives. These are not “hidden agreements” or “kickbacks.” They are common industry practices that have been around for decades and which are included along with standard commissions in the insurers’ rate filings approved by the Insurance Commissioner. This source of income is clearly and separately identified in our profit and loss statement and helps put us in a position to attract and fairly reward talented employees, provides our staff with the tools they require to serve your needs, and allows us to fully meet or exceed our commitments to you. Other than the impact upon our ESOP stock, none of this revenue flows to any individual employee at Thoits.
  • Insurers offering contingent compensation based on volume or profitability of the total book of insurance written with them does not create a conflict of interest as long as your broker always commits to do what is in your best interest. We make that commitment.
  • Contingent compensation is and has been an important and necessary part of the total compensation received by agents and brokers. If it were discontinued (which it may be), the level of service required to meet your needs properly would require that commissions, or fees, be increased to offset this loss. As such, it is not a practice that results in higher premiums being paid by you.

To put these compensation arrangements in perspective, Thoits Insurance sells and services approximately $150 million in annual premiums and receives, on average, about 8/10ths of 1% of that amount in contingent compensation.

We very much value the relationship that we have with you and appreciate the privilege that you have given us to serve you. It is a privilege that we will have to continue earning based on our ability to develop and maintain your trust and most effectively handle your needs. If you have questions concerning any of the publicity surrounding these issues or if you have questions concerning the commitments that we make to you, please give us a call. We will look forward to having the opportunity to discuss openly any of this with you.

Sincerely,

Don Way
Don Way
Chairman