Re Compensation Disclosure
Lockton Re is committed to delivering a superior client experience through our customer-centered service model. Lockton Re wins and keeps clients by operating with complete integrity. We fulfill that pledge by providing fulsome disclosure regarding Lockton Re’s sources of income to clients.
Lockton Re negotiates with reinsurers and accepts commission rates of reinsurance brokerage that are consistent with industry custom and practice. Guidelines for rates of reinsurance that apply to the majority of Lockton Re’s business are set forth below, but they can vary depending on the details of a particular placement.
Brokerage on pro rata reinsurance placements is usually between 1 percent and 2.5 percent of gross ceded premium. Few placements involve brokerage greater than 2.5 percent.
Brokerage on excess of loss reinsurance placements is usually between 5 percent and 10 percent of gross ceded premium. When excess of loss reinsurance placements are made into certain markets or geographies (e.g., the London market), brokerage of 15 percent is charged. A Lockton Re affiliated broker is often used on these placements.
In some markets (e.g., United States and Bermuda) when an additional premium applies to reinstate limits exhausted by paid reinsurance claims, Lockton Re charges reinsurance brokerage of up to 5 percent on those reinstatement premiums.
On some treaty placements, a stated margin is paid to the reinsurer. In such cases, brokerage is usually in the vicinity of 20 percent of the reinsurer’s margin.
Except for United States casualty facultative reinsurance business, the standard rate Lockton Re will earn is 15 percent of ceded reinsurance premium.
For United States casualty facultative reinsurance business, the standard rate Lockton Re will earn is 10 percent of ceded reinsurance premium.
On some facultative reinsurance placements, a local or wholesale broker may be used to access a particular market. An additional 5 percent to 10 percent brokerage ordinarily applies and is earned and paid to the local or wholesale broker on such transactions. A Lockton Re affiliated broker is often used on these placements.
Should Lockton Re earn more or less than the above rates on a particular placement, we will report it to the client.
Should a client request specific information regarding Lockton Re’s compensation on a particular placement, we will provide it.
A more detailed disclosure of Lockton Re’s compensation applicable to reinsurance intermediary broker services is contained Lockton Re’s Reinsurance Intermediary Services agreement.
Please contact your Lockton Re representative if you have specific questions regarding the compensation Lockton Re receives as it relates to your account.