Following is a statement of our group insurance producer-compensation principles, which are consistent with our commitment to integrity and ethical conduct in doing what matters for our customers. For these purposes, a producer is defined to mean any broker, representative, agent, general agent or other intermediary through whom The Standard sells its group products or services to a customer.
Statement of Compensation Principles
The Standard does not and will not engage in any "bid rigging."1 This means that the company will not provide a producer with a proposal that includes a false price quote, or knowingly false pricing assumptions. In addition, if the company knows or suspects that the producer has requested a bid for purposes other than to present a legitimate offer to the customer, the proposal will not be provided.
Disclosure and Producer Payment Practices
The Standard will abide by the letter and the spirit of all laws and regulations relating to producer compensation.
All proposals from The Standard will include a disclosure identifying the type of compensation payable (e.g., commissions, fees, contingent compensation2, as applicable) and where the customer can obtain complete compensation information.
The Standard will not participate in any arrangements in which the company would agree to withhold producer compensation information from a customer, or disclose inaccurate producer compensation information to a customer. The Standard will disclose, where possible and if applicable, producer compensation for the customer's Schedule A (Form 5500). If a customer inquires about producer compensation, The Standard will provide the customer with a description of the applicable compensation arrangement the company has with the producer on the customer's business. This will include the amounts or methods for calculating the compensation to the extent practicable. The Standard will also encourage the customer to contact the producer for additional information.
The Standard will not agree to pay any compensation to a producer that is inconsistent with or not permitted by the applicable written request for proposal ("RFP"). If a producer requests compensation that is inconsistent with the applicable written RFP, The Standard will only agree to such a request if it has been expressly authorized by the customer, or written notification of the change is sent directly to the customer. If an RFP (written or oral) is silent as to producer compensation, The Standard will quote the case based upon the compensation requested by the producer, and disclose such compensation as indicated above.
The Standard will not agree to any "tying" arrangements with producers pursuant to which a producer will agree to sell a product of The Standard on the condition that the company agrees to purchase reinsurance, or any other product or service, from the producer.
The Standard will not provide advance payments or otherwise make loans to producers. This prohibition does not include the business practice of making regularly scheduled estimated compensation payments to producers and subsequently making adjustments to such payments based on actual or reconciled accountings.
The Standard will not offer producers any gratuity, entertainment or hospitality if others could reasonably view acceptance as obligating the producer to improperly give business or other special considerations to The Standard. The offer of any gift to a producer should be disclosed to a supervisor.
The Standard will support regulatory reform to the extent it would better serve our customers, result in more transparent disclosure and level competition.
This Statement of Compensation Principles is applicable to the The Standard's Employee Benefits Division and The Standard Life Insurance Company of New York, and shall be effective as of January 1, 2005. No change to this Statement of Compensation Principles shall be considered effective unless in writing and approved by the Senior Vice President, Employee Benefits Division.
1 "Bid rigging" is deemed to occur when a producer solicits and/or obtains fictitious quotes from insurance companies in order to deceive consumers into believing that true competition has taken place, or to steer particular business to a customer.
2 "Contingent compensation" is additional compensation that is contingent on the satisfaction of one or more minimum requirements, such as a specified minimum amount of new premium volume or persistency in connection with the producer's block of business (e.g., the Premium Rewards program).