The Segal Group, Inc. is providing you with this notice to assist you in collecting information about our services and the compensation received in connection with providing services. These disclosures are intended to be read in conjunction with our agreements for services. This disclosure statement is set forth in three sections, one for each of our core business types – (1) actuarial and benefits/communication services (Segal and Segal Benz); (2) specialized insurance brokerage (Segal Select Insurance Services); and (3) investment consulting and advisory services (Segal Marco Advisors). Please refer to your services agreement or contact your Client Relationship Manager (“CRM”) if you require more information as to which disclosure(s) are appropriate for you.
For purposes of this disclosure statement, Segal refers to all entities in The Segal Group, other than Segal Select Insurance Services, Inc. and Segal Advisors, Inc. This includes all entities that are or have conducted business as: Segal, Segal Company, Segal Consulting, Sibson Consulting, Segal Benz and Segal Waters Consulting[1].
Segal provides actuarial, consulting and communication services to employee benefit plans and plan sponsors to assist with the design, management and service of employee benefit programs. The specific services we provide to you are spelled out in your services agreement with us. If you would like a copy of your most recent agreement or would like to enter into a new agreement describing our services in more detail, please contact your Segal CRM or other representative.
Segal’s primary method of compensation for services, including the placement of insurance coverage, is fee-for-service. Your specific arrangement is detailed in your agreement or described in other communications between you and Segal, and will be in one of the following ways: (1) through a negotiated flat fee covering specified services or (2) through periodic billings based on our hourly time charges.
We do not receive indirect compensation in connection with providing services related to pension benefits.
In certain circumstances, Segal receives indirect compensation in connection with providing Services related to health and welfare benefits. Segal bases its insurance recommendations solely on client requirements and objectives and our process for analyzing proposals and recommending types and levels of coverage is objective and not influenced by our ability to receive commissions or supplemental payments. Objective analysis and neutrality are core values at Segal.
Segal receives indirect compensation in the following ways:
Base Insurance Commissions from the placement of certain life, accident and health insurance benefits, when Segal, a licensed insurance producer, has been appointed by the plan as its broker of record. In some instances, commission rates are based on a pre-set formula incorporating a number of factors (amount of premium, type of insurance, number and type of product lines sold and number of participants enrolled). In some instances, Segal can set or negotiate the commission rate it receives, but that option is not universally available. Therefore, Segal will never agree to guarantee a particular client or prospective client a certain commission rate.
Policies, including premium rates incorporating base commissions, are frequently filed with state insurance regulators and neither a producer nor an insured can modify them once they have been filed. Segal has a written policy governing its receipt and use of commissions.
Prior to binding any commission-bearing insurance policy on your behalf, Segal will provide a written disclosure describing the commission formula for the specific policy. Additionally, we disclose, in writing, the amount of all base commissions we receive on an annual basis to our clients. Where we receive base commissions, we do not charge any administrative or similar fees in connection with placing insurance policies and, to the extent permitted by law, will apply those commissions towards “value added services” related to the policy of insurance. However, in accordance with applicable insurance regulations and our written policy: we cannot return any commissions to any client, including if Segal is terminated by the client during the policy period, or apply commissions to services that do not meet the definition of “value added services.”
Insurance Carrier Supplemental Payments payable to Segal, as a whole, in connection with placing insurance policies with a particular carrier. Supplemental payment formulas are pre-set by each insurer and can be based on a number of factors, including new sales volume or persistency of policies in force with a specific carrier.
Segal has established procedures to prevent its participation in any supplemental compensation programs from influencing the neutrality in recommending insurance products; specifically, the details surrounding these arrangements are only known by designated national staff and not disclosed to client teams involved with placing policies. We generally use these supplemental payments to finance national investment in research, technology, databases and client education and improve client support services.
If a carrier provides us a client-by-client breakdown of these payments, we will disclose to clients their allocable share of such supplemental payments. Note, however, that we usually do not receive enough detail to provide client-specific breakdowns and generally cannot apply these payments towards our consulting fees.
Referral/Preferred Provider Fees from complementary service providers. Segal has occasionally partnered with third parties who provide services that we do not offer directly in order to provide preferred pricing and/or other benefits to our clients. Certain of these service providers pay Segal a referral or finder’s fee in connection with a client choosing to engage them. Prior to a client engaging one of these service providers, we will disclose the details of the specific financial arrangement in place. We also disclose the specific dollar amount received.
If you have any questions related to commissions or other forms of third-party payments received in connection with health and welfare services, please contact Edward Kaplan, the National Health Practice’s Senior Vice President and National Practice Leader at ekaplan@segalco.com.
From time to time, third-party vendors may provide Segal with deminimis non-monetary gifts and gratuities, such as promotional items, and access to certain industry related educational conferences and meals associated with those conferences (collectively, “gifts”). Segal does not accept free entertainment or gifts associated with insurance carrier-sponsored conferences. Segal has policies and procedures intended to identify, quantify and track gifts it receives. Where a gift is received by Segal in connection with several clients, Segal will divide its fair market value by the number of clients and allocate the result to each such client. If the per client value exceeds a de minimis threshold, we will reimburse the vendor for the excess.
Segal has no related party transactions. Segal does not directly or indirectly own any insurance carrier and Segal does not operate as a managing general agency, managing general underwriter or wholesaler.
Segal does not apply a penalty or receive an additional fee upon client contract termination.
Segal Select Insurance Services, Inc. (“Segal Select”) is a specialty insurance brokerage firm wholly-owned by The Segal Group. Prior to January 1, 2013, certain of these insurance brokerage services were provided by Segal’s National Fiduciary Liability Insurance Practice (“NFLIP”). Effective January 1, 2013, NFLIP became Segal Select. If you would like a more detailed description of the services we provide to you or the compensation we receive, please contact your Segal Select broker or Diane McNally, our Senior Vice President and National Practice Leader, at drmcnally@segalco.com.
Segal Select provides specialized insurance brokerage services. Our primary focus is placing and renewing the following coverages: fiduciary liability insurance, fidelity bonds, employment practice liability, and cyber liability insurance. Upon request, we also place non-profit directors’ and officers’ liability, miscellaneous errors and omissions insurance coverages, group annuities, and traditional property/casualty insurance and commercial coverages (such as package or business owners (BOP) insurance; automobile; general liability; property; disability, workers’ compensation and excess liability insurance), in some cases with the help of strategic partners. These services generally include the following: assembly of all needed renewal information and presentation of an underwriting submission for quotations; policy review and analysis; market strategy and proposed coverage specifications; coverage negotiations, including necessary underwriting meetings; quote letters and recommendations; invoicing, premium collection and remittance to insurer; policy review and transmittal; claims reporting; presentations to our clients and their representatives; answering general questions; and periodic Segal Select publications relating to updates in the insurance field, including Segal Select’s benchmarking for premium and limit of liability analysis. We also assist with claims advocacy and support services, such as assisting your legal counsel during a claim process.
Given Segal Select’s role as a licensed insurance broker, we generally do not and cannot receive direct compensation from our clients. Where we receive commissions (as described below), we do not charge any administrative or similar fees and the sum total of our compensation for policy placement is the commission received. In certain circumstances, Segal Select may provide brokerage services and/or additional assistance relating to claims advocacy and support services on fee-for-service basis, as agreed to in writing with a particular client. If applicable, your specific arrangement will be detailed in writing and will either be a negotiated annual retainer amount, covering specified services or through periodic billings, based on our hourly time charges and actual expenses incurred.
Given our role, Segal Select’s primary method of compensation is indirect compensation in the form of commissions from insurers. Segal Select bases its insurance recommendations solely on client requirements and objectives and our process for analyzing proposals and recommending types and levels of coverage is objective and free from any influence by commissions or supplemental payments. Objective analysis and neutrality are core values at Segal Select.
Segal Select receives the following kinds of indirect compensation:
Base Insurance Commissions from the placement of insurance policies. Base commissions are based on pre-set formulas established by insurance carriers typically expressed as a percent of the premiums paid for the insurance policy. The range of commissions (generally 15-20 percent) can vary based upon a number of factors, such as the type of insurance, whether the insurance placement is a primary or excess layer or whether another intermediary such as a wholesaler is involved. Commissions paid by insurance carriers to Segal Select are pre-set, meaning they will not be increased as a result of binding coverage with a particular insurer. These pre-set commissions are not dependent upon a minimum volume of business or profitability of the business placed. Segal Select has a written policy governing its receipt and use of commissions.
We disclose, in writing, the amount of standard commissions we receive on an annual basis to our clients. Where we receive commissions, we do not charge any administrative or similar fees in connection with placing and servicing insurance policies. The following table describes typical ranges of commissions for the coverages we place:
| Coverage Type | Primary Commission Range |
|---|---|
| Fiduciary liability | 15-20% of premium |
| Fidelity bonds | 15-20% of premium |
| Employment practice liability | 15-20% of premium |
| Cyber liability | 15-20% of premium |
| Non-profit directors’ and officers’ (D&O) liability | 15-20% of premium |
| Miscellaneous errors and omissions (E&O) liability | 15-20% of premium |
| Package or Business Owners (BOP) liability | 15-20% of premium |
| Automobile | 15-20% of premium |
| General Liability | 15-20% of premium |
| Property | 15-20% of premium |
| Disability | 5-15% of premium |
| Workers’ Compensation | 5-15% of premium |
| Excess Liability | 10% of premium |
Upon request, we will provide you with the commission formula that is applicable to your policy.
Insurance Carrier Supplemental Payments payable to Segal Select in connection with placing insurance policies. Supplemental payment formulas are also pre-set by each insurer and can be based on a number of factors, including new sales volume or persistency of policies in force with a specific carrier. Segal Select has established procedures to prevent its participation in any supplemental compensation programs from influencing the neutrality in recommending insurance products; specifically, the details surrounding these arrangements are only known by designated national staff and not disclosed to individual brokers. We generally use these supplemental payments to finance national investment in research, technology, databases and client education and improve client support services.
If a carrier provides us a client-by-client breakdown of these payments, we will disclose to clients their allocable shares of such supplemental payments. Note, however, that we do not always receive enough detail to provide client-specific breakdowns.
Transactions with Wholesalers to allow Segal Select to access additional insurance carriers on behalf of our clients. In these instances, Segal Select’s commission compensation is generally less because a portion of its commission is paid by the carrier to the wholesaler. We will notify you if we intend to engage a wholesaler in connection with placing your policy. Please note that the wholesaler may charge a policy fee or negotiate additional commission and/or other compensation arrangements directly with carriers, to which Segal Select is not privy.
We do not receive any other indirect compensation in connection with our services. Specifically, we do not earn a significant float on your premium dollars. Historically, as our invoices instruct clients to draw checks payable to the insurance carrier based upon the gross premium, no float is earned. Premium checks payable or wire transfer (ACH) payments to Segal Select are processed in a timely fashion.
From time to time, third-party insurance carriers and vendors may provide Segal Select with de-minimis non-monetary gifts and gratuities, such as promotional items, and access to certain industry related conferences and meals associated with those conferences (collectively, “gifts”). Segal Select does not accept free entertainment or gifts associated with insurance carrier-sponsored conferences and we do not receive compensation or reimbursement from any carrier for any marketing expenses.
Segal Select has no related party transactions. Segal Select does not directly or indirectly own any insurance carrier and Segal Select does not operate as a managing general agency, managing general underwriter or wholesaler.
Segal Select does not apply a penalty or receive an additional fee upon client contract termination.
Segal Select Insurance Services Inc., is an insurance producer licensed by the State of New York. Insurance producers are authorized by their license to confer with insurance purchasers about the benefits, terms and conditions of insurance contracts; to offer advice concerning the substantive benefits of particular insurance contracts; to sell insurance; and to obtain insurance for purchasers. The role of the producer in any particular transaction typically involves one or more of these activities.
Compensation will be paid to the producer, based on the insurance contract the producer sells. Depending on the insurer(s) and insurance contract(s) the purchaser selects, compensation will be paid by the insurer(s) selling the insurance contract or by another third party. Such compensation may vary depending on a number of factors, including the insurance contract(s) and the insurer(s) the purchaser selects. In some cases, other factors such as the volume of business a producer provides to an insurer or the profitability of insurance contracts a producer provides to an insurer also may affect compensation.
The insurance purchaser may obtain information about compensation expected to be received by the producer based in whole or in part on the sale of insurance to the purchaser, and (if applicable) compensation expected to be received based in whole or in part on any alternative quotes presented to the purchaser by the producer, by requesting such information from the producer
The Foreign Account Tax Compliance Act (FATCA) requires the notification of certain financial accounts to the United States Internal Revenue Service. Segal does not provide tax advice so please contact your tax consultant for your obligation regarding to FATCA.
Segal Advisors, Inc., doing business as Segal Marco Advisors (“Segal Marco”), is a registered investment adviser wholly-owned by The Segal Group. This statement is intended to be read in conjunction with Segal Marco’s Form ADV, Part 2 (available at http://www.adviserinfo.sec.gov or by reaching out to your client representative).
Segal Marco offers investment consulting, investment advisory, and investment management services. The specific services we provide to you are spelled out in your services agreement with us. If you would like a copy of your most recent agreement or would like to enter into a new agreement describing our services in more detail, please contact your Segal Marco CRM or other representative. Additional information related to our business and services can also be found in Item 4 (“Advisory Business”) of our Form ADV, Part 2A.
Segal Marco is a fiduciary within the meaning of the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder (“ERISA”). Segal Marco is an investment advisor registered under the Investment Advisers Act of 1940 and renders investment advice for a fee to covered plans. Additionally, in certain instances, Segal Marco exercises discretionary authority or control over the assets of covered plans. Your agreement includes an acknowledgement of our fiduciary status.[2]
Accordingly, Segal Marco is a “covered service provider” within the meaning of ERISA Section 408(b)(2) when providing services to covered plans.
Segal Marco’s primary method of compensation for Services is direct fee-for-service. Your specific arrangement is detailed in your agreement with Segal Marco and will be in one or more of the following ways: (1) through a negotiated flat fee covering specified services; (2) through periodic billings based on our hourly time charges; or (3) based upon an agreed-upon percentage of assets measured as of a particular date (usually at the end of a calendar quarter).
Additionally, in certain circumstances, you may agree to pay Segal Marco based on the investment performance of a portfolio as measured against an agreed-upon benchmark. These arrangements can be automatically applied (e.g. a fixed percentage of a portfolio’s outperformance) or applied on a discretionary basis by you. A performance fee provision is generally in addition to a negotiated annual retainer amount.
Segal Marco does not anticipate receiving any indirect compensation in connection with providing services. Specifically, we do not receive soft dollars, 12B-1 fees or similar forms of compensation based on specific financial transactions or investment decisions.
There are a handful of situations which result in additional compensation payable to Segal Marco in the course of its business. Please reach out to your client services representative for more information about any of the situations described below.
From time to time, third-party vendors (such as product providers, mutual fund companies, broker-dealers, etc.) may provide Segal Marco (and its affiliates) with non-monetary gifts and gratuities, such as promotional items (i.e., coffee mugs, calendars, or gift baskets) and access to certain industry related conferences and meals associated with those conferences (collectively, “gifts”). Segal Marco has implemented policies and procedures intended to identify, quantify, track, and where appropriate, allocate the value of gifts it receives. A copy of the current gift policy can be requested from your client services representative.
Based on historic trends, Segal Marco does not expect to receive gifts in excess of the de minimis threshold established under applicable regulations with respect to any client relationship.
Segal Marco does not apply a penalty or receive an additional fee upon client contract termination.
[1] The trade names of the following legal entities: The Segal Company (Eastern States), Inc., The Segal Company (Midwest), Inc., The Segal Company (Southeast), Inc. and The Segal Company (Western States), Inc. Please refer to your retainer or contact your CRM if you require more information as to the legal entity providing services to your plan.
[2] If your plan participates in the Marco Consulting Group Trust (the “Group Trust”) and invests in one or more of the investment portfolios established under the Group Trust, please refer to the Group Trust offering documents for a description of the services that we offer under the Group Trust. In providing our services under the Group Trust, we will be acting as both an ERISA fiduciary and a registered investment adviser under the Investment Advisers Act of 1940, as amended.
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