The objective of the plan is (i) to encourage older and other important employees to contribute to the long-term viability of the business in order to adequately balance incentives and risks, in doing so, balancing the interests of staff with those of shareholders and other stakeholders of the company, (ii) attracting and retaining executives and other important employees by offering competitive compensation and (iii) key employees and other priority staff for their efforts to achieve sustainable profitability of the company. If the Agency provides the company with a significant volume of profitable excluded transactions, the Agency should negotiate for another profit from the company. Agencies generally maintain claims protocols to verify the Agency`s experience with loss and to verify the accuracy of corporate loss deductions under the incentive agreement. The entity should provide a detailed list of invoiced losses, as the information is essential for the Agency to align its commission with interest and determine its loss rate for the year. A contract should define the impact of the changes. It is important that the Agency communicates the change before the start of the profit-sharing year. The provisions allowing a company to amend the agreement in the middle of the year do not give the Agency a fair opportunity to plan for the amendment. Determine the performance report by adding the commission report plus the loss report. (The commission rate is the commissions that are divided by the written premium.) Use this performance report to determine the percentage of profit bonuses in tables that are an endorsement to the agreement. Then multiply the bonus percentage by the “growth adjustment factor.” (“growth adjustment factor”: the ratio between the written premium for the current calendar year and the written premium for the calendar year immediately preceding. This report should not exceed 2.) Multiply the written premium by the adjusted bonus percentage to determine the profit bonus. Determine the renewal retention index and renewal bonus from the tables.

Multiply the percentage of the renewal bonus with the extension bonus to determine the extension bonus. Apply the stabilization report by deriding the sum of all bonuses from all agents/brokers with an interest agreement in effect by the entire written premium of all these agents/brokers. If the stabilization rate is less than 1%, the renewal and profit bonuses are changed by the 1% ratio divided by the stabilization rate. If the stabilization rate is above 2%, the renewal and profit bonuses are changed by the 2% ratio divided by the stabilization rate. While commissions are logically deducted from income, incentive fees should not be treated in this way, as they do represent a share of last year`s profit and not a portion of this year`s expenditure.