SeaBright Producer Compensation Disclosure

Producers

We sell our insurance products and services through a network of independent insurance brokers, managing general underwriters (MGUs), and select wholesale brokers, and we consider this the preferred way of distributing our products. We refer generally to brokers and MGUs as "producers."

Producers are not our employees. However, producers may receive compensation from us for placing workers' compensation insurance with us. The following is an overview of how we compensate producers.

Producer Compensation

Producer compensation is designed to encourage producers to sell our products, to assist us in evaluating risks and servicing accounts, and to retain profitable business with us. Currently, our compensation programs fall into two categories: base commissions and contingent commissions. Producers may receive some or both forms of these payments, depending on the producer's relationship with us.

• Base Commission Programs
  We pay producers a fixed commission for each insurance policy they sell. This commission is paid on new and renewal policies and is usually a fixed percentage of the premium the policyholder pays for the policy. The percentage varies according to several factors, such as the type of business, the type of risk, and the state where a risk is located.
• Contingent Commission Programs
  Contingent commission agreements provide for payment when the producer achieves various pre-set goals. Typical goals include profitability, growth and retention, and sales volume. We normally evaluate performance against the pre-set goals on an annual basis. If the producer has met the goals, the payment amount is usually a percentage of the premium a producer has placed with us.
  • Profitability: We measure a producer's profitability by comparing losses to premium on the policies the producer placed with us for specific types of workers' compensation insurance. The policies the producer has placed with us must achieve a pre-set ratio of losses to premium to be considered profitable.
  • Sales Volume: We measure the premium volume of policies a producer places with us for one or more types of workers' compensation insurance.
  • Growth and Retention: We measure whether the amount of business a producer has with us is increasing or decreasing. We may look at change in premium volume, change in the actual number of policies, number of newly written polices or a combination of these. These calculations may vary by type of insurance.

Additional Information

From time to time, we may give producers complimentary items of nominal value. These items are generally not based on profitability or growth, and are typically in the form of marketing items to promote new products and programs.

If you would like additional information regarding compensation arrangements, please contact your producer. We also encourage you to check this web site periodically for updated information on our producer compensation policies.