Hanover Producer Compensation Disclosure

The Hanover Insurance Group (“The Hanover”) is a leading provider of property and casualty insurance products for individuals, their families and businesses. Those products are sold through independent agents and brokers, often referred to as “Producers.” Producers who offer our products to customers are not employees of The Hanover, but are typically compensated by The Hanover for their services in representing us and distributing our products. Independent agents are typically appointed by us to represent The Hanover and they generally represent several of our competitors as well.

Compensation

The Hanover pays Producers a fixed commission for placing and renewing business with the company. The Hanover may also pay additional commission and other forms of compensation to Producers as an incentive to place and maintain their business with the Company.

Base Commission

The Hanover, like other insurance companies, pays its Producers a base commission (sometimes called a “standard commission”) for the sale and service of new and renewal policies placed with the company. The base commission is, in most cases, a fixed percentage of the policy premium paid by the customer and may vary by Producer, product, state or other factors.

Additional Commission and Other Compensation

Like other insurance companies, The Hanover offers various forms of incentive compensation, including overrides and contingent commission payment programs, to eligible Producers. These programs provide additional compensation to eligible Producers for meeting certain goals that are pre-set by The Hanover. Payment of additional compensation by The Hanover to Producers may be based on meeting one or a combination of criteria. Such criteria may include meeting certain production, retention, growth, profitability and/or other performance goals set by The Hanover. It may not be possible for The Hanover to know when a particular policy is written whether such policy will contribute to making a Producer eligible for additional compensation.

• Production - Measures whether the volume of the Producer’s policies within an established period of time meets or exceeds The Hanover’s pre-set expectations.
• Retention - Measures whether the Producer maintains a certain number of policies with The Hanover over an established period of time.
• Growth - Measures whether the volume of business the Producer has with The Hanover meets or exceeds a pre-set growth amount over an established period of time.
• Profitability - Measures whether the policies the Producer has placed with The Hanover achieve a pre-set loss ratio or other profitability factor established by The Hanover.
• Commitment - Measures vary, but may include whether the Producer has committed to and/or placed a certain agreed percentage of business or product line with The Hanover, agreed to provide The Hanover with an opportunity to quote on all or a portion of a Producer’s book of qualifying business or met other criteria to achieve a preferred status with us.

Business Production Incentive Programs

From time to time, The Hanover may provide other incentive compensation programs to eligible Producers to compensate the Producers for their efforts and expenses in providing a Hanover quote to their customers and/or facilitating issuance of a policy to those customers who become policyholders of The Hanover. The Hanover may also provide additional compensation to Producers based on the amount of such policies written and retained by The Hanover over an established period of time.

Loans

The Hanover may make a loan to Producers interest free or at interest rates determined by The Hanover. Repayment of such loans may be offset by compensation earned in the future or forgiven, in whole or in part, if certain pre-set objectives established by The Hanover are met by the Producer.

Captive Insurance or Reinsurance Arrangements

The Hanover may sponsor, be affiliated with or have other arrangements with reinsurance companies or risk retention entities in which Producers may invest and which are utilized to reinsure business placed by such Producers with The Hanover and pursuant to which such Producers may share in any underwriting profits and/or losses generated by such policies.

Services

The Hanover may make available designated customer services to certain Producers, with or without charge to the Producer. If such services are provided to a Producer for a fee, that fee may be waived based upon the Producer meeting certain criteria established by us. Fees charged for such services may be offset against commissions payable from The Hanover to the Producer.

Reimbursement of Marketing or Promotional Expense and Other Arrangements

The Hanover may, from time to time, pay or sponsor Producer marketing efforts aimed at assisting certain Producers to write more business with The Hanover. The Hanover may also pay other cash or non-cash compensation (such as awards, entertainment, trips or expense reimbursement) to Producers, including to an agency’s customer service representatives.

In order to assist The Hanover to fully analyze market developments, assess emerging opportunities, create and deliver products and services that most effectively meet the needs of the insurance marketplace, and identify potential customers whose risks meet The Hanover’s underwriting guidelines, The Hanover may enter into service agreements with Producers whereby those Producers provide information, data, or services related to their customers and/or potential customers in order to enable The Hanover to quote on policies, consulting services, and/or general business services. The Hanover may pay compensation or fees to Producers related to such service agreements, in addition to customary commission arrangements.

The Hanover may also pay compensation, including endorsement fees and administrative or other fees, to sponsoring associations or other entities or organizations that endorse or promote our products.

Additional Information

If you would like specific information pertaining to your policy or compensation paid to your Producer by The Hanover, please contact the Producer.