Safeco Insurance producer compensation disclosure

Safeco Corporation's insurance subsidiaries (together, "Safeco") primarily sell and service their insurance products and services through an extensive network of independent insurance agents and brokers ("producers"). While our independent producer network is the primary way we sell our insurance products, we also sell insurance through our licensed employees.

Producers are not our employees; however, we do compensate them for placing insurance with us and for providing other services to our customers. The following is a brief overview of the types of compensation we pay our producers. Additional information also may be available from your producer.

Producer Compensation

We design our compensation system to encourage producers to sell our products, to assist us in evaluating risks and servicing accounts, and to retain profitable business with us. Our compensation programs fall into three basic categories: 1) commission; 2) contingent compensation; and 3) additional incentives. Producers may receive some or all forms of these payments, depending on the producer's business relationship with us.

Commission

We pay our producers a base commission for each insurance policy they sell. This commission is paid on new and renewal policies.

This commission is a percentage of the premium charged to the insured for the policy. The amount of the commission depends on the type of insurance product sold, risk classification, producer size, state where the risk is located, or services provided to the policyholder. We offer a wide variety of insurance products, and therefore pay a wide range of commissions. For the majority of our products, we pay producers a base commission in the range of 3% to 18%, although the commission may be higher for some products.

Producers may charge their customers a fee related to services they provide. Any such fee would be in addition to receiving a commission from us. In certain transactions, more than one producer may be involved in placing insurance coverage with us. If more than one producer is involved, both producers may receive a commission or, more often, the commission is split between the producers.

Contingent Compensation

In addition to base commissions, producers also may be eligible to receive "contingent" compensation equal to a percentage of the premium a producer has placed with us for a specific type of insurance. This form of compensation is contingent on various factors, such as the producer's ability to meet pre-established goals for profitability, retention and sales volume during a particular year. If a producer does not meet the pre-established goals for the year, then that producer is not eligible to receive the contingent compensation.

Additional Incentives and Benefits

At times we will provide producers or their employees the opportunity to receive additional compensation for placing specific types of polices with us, helping us pursue new business opportunities with their customers, or performing other tasks. This additional incentive may take the form of a sales contest where cash, trips or other prizes are awarded and may take the form of additional commission. These incentives are designed to promote the placement of business with us.

We may also reimburse certain producers' expenses relating to marketing activities. This may include advertising materials, training expenses, or goods and services that help to promote our company and our products. We also may pay for business meals and provide other entertainment for our producers.

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

Finally, we may pay compensation to entities that endorse Safeco and promote the sale of our products and services.

Ownership Interests

Safeco owns its own insurance agencies through which it sells insurance.

Other Important Information

This overview provides information about how Safeco currently compensates its producers. Because this is an overview, there are exceptions not addressed within the scope of this discussion. If you would like additional information about a commission paid on your policy, please contact your producer. Also, please check this website periodically for updated information on this subject.