Exhibit 10.2

                             ERIE INDEMNITY COMPANY
                            LONG-TERM INCENTIVE PLAN

                                   1. GENERAL

1.1      Purpose.

         The purposes of the Long-Term  Incentive  Plan (the "Plan") are: (a) to
         enhance  the growth and  profitability  of Erie  Indemnity  Company,  a
         Pennsylvania  business corporation  ("Erie"),  and its subsidiaries and
         affiliates  by providing  the  incentive  of  long-term  rewards to key
         employees  who are  capable  of  having  a  significant  impact  on the
         performance of Erie and its subsidiaries and affiliates; (b) to attract
         and retain  employees of  outstanding  competence  and ability;  (c) to
         further   align  the  interests  of  such   employees   with  those  of
         shareholders of Erie.

1.2      Definitions.

         For the  purpose  of the  Plan,  the  following  terms  shall  have the
         meanings indicated:

         (a)      "Board of Directors" or "Board" shall mean the Board of
                  Directors of Erie.

         (b)      "Code"  shall  mean the  Internal  Revenue  Code of  1986,  as
                  amended, including any successor law thereto.

         (c)      "Company" shall mean Erie and any corporation, partnership, or
                  other organization of which Erie, directly or indirectly, owns
                  or  controls  not less than 50% of the total  combined  voting
                  power of all classes of stock or other equity  interests.  For
                  purposes of this Plan,  the terms "Erie" and  "Company"  shall
                  include any successor thereto.

         (d)      "Common  Stock"  shall  mean the Class A  (non-voting)  Common
                  Stock of Erie and a "share of  Common  Stock"  shall  mean one
                  share of Common Stock.

         (e)      "Disability" shall mean total and permanent  disability within
                  the meaning of Section 22(e)(3) of the Code.

         (f)      "Fair  Market  Value" of  shares of Common  Stock on any given
                  date(s)  shall be:  (a) the daily  average of the high and low
                  sales  prices on the  NASDAQ  National  Market  System of such
                  shares on the date(s) in question, or, if the shares of Common
                  Stock  shall not have been  traded  on any such  date(s),  the
                  closing  price on the  NASDAQ  National  Market  System on the
                  first day prior  thereto on which the  shares of Common  Stock
                  were so traded;  or (b) if the shares of Common  Stock are not
                  traded on the NASDAQ National Market System, such other amount
                  as may be determined by the Plan Administrator by any fair and
                  reasonable means.

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         (g)      "Participant"  shall  mean  any key  employee  who has met the
                  eligibility  requirements  set forth in Section 1.4 hereof and
                  to whom a grant  has been  made and is  outstanding  under the
                  Plan.

         (h)      "Performance  Period" shall mean, in relation to Phantom Share
                  Units, any period, for which performance  objectives have been
                  established pursuant to Article 2.

         (i)      "Phantom  Share Unit" shall mean a right,  granted to a
                  Participant pursuant to Article 2.

         (j)      "Plan   Administrator"   shall   mean:   (i)   the   Executive
                  Compensation   Committee  of  the  Board  of  Directors   (the
                  "Committee"),  or its functional successor,  unless some other
                  Board  committee has been designated by the Board of Directors
                  to administer  the Plan or any portion of the Plan; or (ii) in
                  the event that the  Committee is not  comprised of two or more
                  "Non-Employee   Directors"   within   the   meaning   of  Rule
                  16b-3(a)(3)  promulgated  under  Section 16 of the  Securities
                  Exchange Act of 1934, then the Plan Administrator  shall, with
                  respect to officers  and  directors  subject to Section 16, be
                  the Board.

         (k)      "Restricted Share" shall mean a share of Common Stock, granted
                  to a  Participant  pursuant  to  Article  3,  subject  to  the
                  restrictions set forth in Section 3.1 hereof.

         (l)      "Retirement"  shall mean the cessation of employment  with the
                  Company after reaching age 55 and having  completed at least 5
                  years of service.

         (m)      "Vesting  Period" shall mean in relation to Restricted  Shares
                  receivable in payment for Phantom  Share Units,  the period of
                  time during which such shares are subject to  restrictions  on
                  transferability  and  may be  forfeited  if the  Participant's
                  employment is terminated.

1.3      Administration.

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         The Plan shall be administered by the Plan  Administrator  and the Plan
         Administrator  shall act in accordance with the procedures  established
         under  Erie's  Articles  of   Incorporation,   By-laws  and  under  any
         resolution of the Board.  Subject to the  provisions  of the Plan,  the
         Plan  Administrator  shall  have sole and  complete  authority  to: (i)
         subject to Section 1.4 hereof,  select Participants after receiving the
         recommendations  of the  management of the Company;  (ii) determine the
         number of Phantom  Share  Units or  Restricted  Shares  subject to each
         grant;  (iii) determine the time or times when grants are to be made or
         are to be effective; (iv) determine the terms and conditions, including
         the  performance  objectives,  subject to which grants may be made; (v)
         extend the term of any grant;  (vi)  prescribe the form or forms of the
         instruments  evidencing any grants made  hereunder,  provided that such
         forms are consistent  with the Plan;  (vii) adopt,  amend,  and rescind
         such rules and regulations as, in its opinion, may be advisable for the
         administration  of the Plan; (viii) construe and interpret the Plan and
         all rules, regulations,  and instruments utilized thereunder;  and (ix)
         make  all   determinations   deemed  advisable  or  necessary  for  the
         administration   of  the   Plan.   All   determinations   by  the  Plan
         Administrator shall be final and binding.

1.4      Eligibility and Participation.

         Participation in the Plan shall be limited to officers (who may also be
         members of the Board of Directors)  and other salaried key employees of
         the Company as identified by the Plan  Administrator  to participate in
         the Plan.


                 2. PROVISIONS APPLICABLE TO PHANTOM SHARE UNITS

2.1      Performance Periods.

         The Plan Administrator  shall establish  Performance Periods applicable
         to Phantom Share Units.  Each such  Performance  Period shall  commence
         with the beginning of a fiscal year in which performance objectives are
         established  and have a  duration  of not less than  three  consecutive
         fiscal years.

2.2      Performance Objectives.

         The  Plan  Administrator   shall  establish  one  or  more  performance
         objectives for each Performance Period , provided that such performance
         objectives shall be established prior to the grant of any Phantom Share
         Units with  respect to such  period.  Performance  objectives  shall be
         based on one or more of the following  measures:  (i) retained earnings
         per share plus  dividend,  (ii)  earnings or earnings per share,  (iii)
         assets or  return on  assets,  (iv)  shareholder's  equity or return on
         shareholder's  equity,  (v)  revenues,  (vi) costs,  (vii) gross profit
         margin,  (viii)  investment  earnings,  (ix) loss ratio,  (x)  combined
         ratio, or (xi) any other measure  determined by the Plan  Administrator
         to be in the best interests of the Company. The Plan Administrator may,
         in its discretion,  establish performance objectives for the Company as
         a whole or for only the  business  unit of the Company in which a given
         Participant is involved, or a combination thereof.

2.3      Grants of Phantom Share Units.

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         The Plan  Administrator  may select  employees  to become  Participants
         (subject to the  provisions  of Section  1.4 hereof) and grant  Phantom
         Share  Units to such  Participants  at any time  prior to or during the
         first fiscal year of a Performance  Period.  Before making grants,  the
         Plan  Administrator  shall  receive  the  recommendations  of the Chief
         Executive  Officer of the  Company,  which will take into  account such
         factors as level of responsibility,  current and past performance,  and
         performance  potential.  Each grant to a Participant shall be evidenced
         by a written  instrument  stating  the  number of Phantom  Share  Units
         granted,  the target value of each Phantom Share Unit, the  Performance
         Period,  the performance  objective or objectives,  the Vesting Periods
         and restrictions  applicable to Restricted Shares receivable in payment
         for Phantom Share Units and any other terms, conditions and rights with
         respect to such grant.

2.4      Adjustment With Respect to Phantom Share Units.

         Any other  provision of the Plan to the contrary  notwithstanding,  the
         Plan Administrator may at any time adjust performance objectives (up or
         down), adjust the way performance  objectives are measured,  or shorten
         any Performance Period, if it is determined that conditions, including,
         but not  limited to,  changes in the  economy,  changes in  competitive
         conditions,  changes in laws or  governmental  regulations,  changes in
         generally  accepted  accounting  principles,  changes in the  Company's
         accounting policies,  acquisitions or dispositions,  stock redemptions,
         reductions or increases in the  management  fee rate payable to Erie by
         Erie  Insurance  Exchange,  reductions to  shareholders'  equity due to
         reductions or increases in net  unrealized  gain on  available-for-sale
         securities or the occurrence of other events  impacting the performance
         objectives, so warrant; provided,  however, that the Plan Administrator
         may not make any such  adjustment  that  would  increase  the  economic
         benefit to any "covered  employee" as defined in Section  162(m) of the
         Code.

2.5.     Maximum Annual Award.

         The  maximum  value of  Phantom  Share  Units that may be earned by any
         Participant in any year shall not exceed $500,000.

2.6      Payment for Phantom Share Units.


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         Within  90 days  after  the end of any  Performance  Period,  the  Plan
         Administrator  shall  determine the total dollar value of Phantom Share
         Units held by each Participant for such Performance Period. Payment for
         Phantom Share Units shall be in the form of Restricted Shares and shall
         be subject to the terms and conditions of Section 3 hereof. Such Common
         Stock shall be purchased in the open market,  provided however, that if
         the  Common  Stock  of the  Company  is not  readily  available  in the
         marketplace,  or purchase  of the Common  Stock for  Restricted  Shares
         would  artificially  affect the price of the Common Stock,  in the sole
         discretion  of the  Plan  Administrator,  Restricted  Shares  shall  be
         payable in deferred  stock units equal in value to the number of shares
         of Common  Stock that would have been paid to the  Participant  had the
         Common  Stock  been  available  in  the  marketplace.   The  number  of
         Restricted Shares (or stock unit equivalents) granted shall be equal to
         the actual  total  value of the  Phantom  Share Units at the end of the
         Performance  Period  divided by the monthly  average  price of the Fair
         Market Value of the Common Stock for the month following the end of the
         Performance Period, rounded up to the nearest whole share.

2.7      Termination of Employment.

         (a)      Prior to the end of a Performance Period:

                  (i)      Death, Disability or Normal Retirement:  If a
                           Participant ceases to be an employee of the Company
                           prior to the end of a Performance Period by reason
                           of death, Disability or Normal Retirement (as defined
                           in the Company's qualified Retirement Plan for
                           Employees), the Performance Period for outstanding 
                           Phantom Share Units shall be deemed to end as of the
                           end of the fiscal year in which such event occurred.
                           The total dollar value of Phantom Share Units held by
                           such Participant shall be based upon performance 
                           during the reduced Performance Period and will be 
                           paid in the form of shares of Common Stock in the
                           manner provided for by Section 2.6.  Any shares of
                           Common Stock payable pursuant to this Section 2.7,
                           shall be free of any restrictions or risk of
                           forfeiture under the Plan and shall be registered in
                           the name of the Participant or the Participant's
                           beneficiary or estate, as the case may be, as soon as
                           practicable after the end of the applicable
                           Performance Period.


                  (ii)     Other Terminations:  If a Participant ceases to be an
                           employee prior to the end of a Performance Period for
                           any reason  other than  death,  Disability  or Normal
                           Retirement, the Participant shall immediately forfeit
                           all Phantom Share Units previously  granted under the
                           Plan. The Plan  Administrator  may,  however,  in its
                           sole  discretion,  permit a Participant to retain all
                           or a portion of his  Phantom  Share Units if it finds
                           that  the  circumstances  in the  particular  case so
                           warrant.

         (b)      After the end of a  Performance  Period,  but prior to the end
                  of a Vesting Period:

                  (i)      Death or Disability: If a Participant ceases to be an
                           employee  of  the  Company  by  reason  of  death  or
                           Disability,  the  Vesting  Period  shall be deemed to
                           have  ended and  shares of Common  Stock  held by the
                           Company with  respect to  Restricted  Shares  earned
                           by such Participant  shall be paid as soon as
                           practicable in  the manner set forth in 3.4 hereof


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                  (ii)     Retirement: The Retirement of a Participant shall not
                           constitute a termination  of employment  for purposes
                           of this Section 2(b), and such Participant  shall not
                           forfeit  any Common  Stock held by the  Company  with
                           respect   to   Restricted   Shares   earned  by  such
                           Participant.

                  (iii)    Other Terminations:  If a Participant ceases to be an
                           employee prior to the end of a Vesting Period for any
                           reason other than death, Disability or Retirement,
                           the Participant shall immediately forfeit all
                           unvested Restricted Shares previously granted with
                           respect to such Vesting Period in accordance with the
                           provisions of Section 3.2(c) hereof, unless the Plan
                           Administrator, in its sole discretion, finds that the
                           circumstances in the particular case so warrant and
                           allows a Participant whose employment has so
                           terminated to retain any or all of the Restricted
                           Shares granted to such Participant.


                  3. PROVISIONS APPLICABLE TO RESTRICTED SHARES

3.1      Vesting Periods.

         At the time a Phantom Share Unit award is made, the Plan  Administrator
         shall establish a Vesting Period  applicable to Restricted  Stock which
         shall not be more than three years. The Plan  Administrator may provide
         for  the  lapse  of  all  or  a  portion  of  such  Vesting  Period  in
         installments and may accelerate or waive such Vesting Period,  in whole
         or in  part,  based  on such  factors  as the  Plan  Administrator  may
         determine.

3.2      Rights and Restrictions Governing Restricted Shares.

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         At the time of payment in Restricted Shares,  subject to the receipt by
         the Company of any applicable consideration for such Restricted Shares,
         one or more certificates  representing the appropriate number of shares
         of Common Stock granted to a Participant  shall be registered either in
         his name or for his benefit either  individually or  collectively  with
         others,  but  shall  be held by the  Company  for  the  account  of the
         Participant.  The  Participant  shall have all rights of a holder as to
         such shares of Common Stock,  including the right to receive dividends,
         subject to the following restrictions: (a) the Participant shall not be
         entitled to delivery of certificates representing such shares of Common
         Stock  and any  other  such  securities  until  the  expiration  of the
         applicable  Vesting  Period;  (b) none of the Restricted  Shares may be
         sold,  transferred,  assigned,  pledged,  or  otherwise  encumbered  or
         disposed of during the applicable  Vesting  Period;  and (c) all of the
         Restricted  Shares shall be forfeited and all rights of the Participant
         to such Restricted Shares shall terminate without further obligation on
         the  part  of  the  Company  unless  the  Participant  remains  in  the
         continuous  employment of the Company for the entire  Vesting Period or
         portion  thereof in  relation  to which  such  Restricted  Shares  were
         granted, except as otherwise allowed by Section 2.7 hereof. At the time
         of payment in Restricted  Shares, if the Common Stock of the Company is
         not readily  available  in the  marketplace,  or purchase of the Common
         stock would  artificially  affect the price of the Common Stock, in the
         sole  discretion  of the Plan  Administrator,  then in that event,  the
         Company  shall  have the option to pay to the  Participant  in cash the
         Fair Market Value of the Restricted Shares on such payment date.

3.3      Adjustment with Respect to Restricted Shares.

         Any other provisions of the Plan to the contrary  notwithstanding,  the
         Plan  Administrator  may at any time shorten any Vesting Period,  if it
         determines  that  conditions,  including but not limited to, changes in
         the  economy,  changes in  competitive  conditions,  changes in laws or
         governmental  regulations,  changes in  generally  accepted  accounting
         principles, changes in the Company's accounting policies,  acquisitions
         or  dispositions,  or the occurrence of other unusual,  unforeseen,  or
         extraordinary events, so warrant.

3.4      Payment of Restricted Shares.

         In the event that a Participant is still employed by the Company at the
         end  of  the  Vesting  Period  or  portion   thereof,   all  applicable
         restrictions shall lapse as to Restricted Shares granted in relation to
         such  Vesting  Period,  and  one or  more  stock  certificates  for the
         appropriate  number of shares of Common  Stock,  free of  restrictions,
         shall be delivered to the  Participant or such shares shall be credited
         to a brokerage account if the Participant so directs.

3.5      Deferral of Payment.

         The Plan Administrator may, in its sole discretion, offer a Participant
         the right, by execution of a written agreement, to defer the receipt of
         all or any portion of the payment,  if any, for Restricted  Shares.  If
         such an  election  to defer is made,  the Common  Stock  receivable  in
         payment for Restricted Shares shall be deferred as stock units equal in
         number to the  number of shares of Common  Stock  that  would have been
         paid to the  Participant.  Such  stock  units  shall  represent  only a
         contractual  right  and shall not give the  Participant  any  interest,
         right,  or title to any Common Stock during the  deferral  period.  The
         cash  receivable  in  payment  for  fractional  shares  receivable  for
         Restricted Shares shall be deferred as cash units.  Deferred cash units
         may be credited  annually with an appreciation  factor specified in the
         deferred   compensation   agreement,   which  will   include   dividend
         equivalents.  At the end of the deferral  period,  deferred stock units
         and cash units shall be paid in Common  Stock,  except that any payment
         attributable to fractional  shares  shall  be  paid  in  cash.  All
         other  terms  and conditions  of deferred  payments  shall be as
         contained  in a written deferred compensation agreement.


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                                4. MISCELLANEOUS

4.1      Designation of Beneficiary.

         A  Participant  may  designate,  in a writing  delivered to the Company
         before his death,  a person or persons to receive,  in the event of his
         death,  any  rights to which he would be  entitled  under  the Plan.  A
         Participant  may also  designate  an alternate  beneficiary  to receive
         payments if the primary beneficiary does not survive the Participant. A
         Participant  may designate  more than one person as his  beneficiary or
         alternate  beneficiary,  in  which  case  such  persons  would  receive
         payments as joint tenants with a right of  survivorship.  A beneficiary
         designation  may be changed or revoked by a Participant  at any time by
         filing a  written  statement  of such  change  or  revocation  with the
         Company.  If a Participant  fails to designate a beneficiary,  then his
         estate shall be deemed to be his beneficiary.

4.2      Employment Rights.

         Neither the Plan nor any action taken  hereunder  shall be construed as
         giving any  employee of the Company the right to become a  Participant,
         and a grant  under  the Plan  shall  not be  construed  as  giving  any
         Participant any right to be retained in the employ of the Company.

4.3      Nontransferability.

         A  Participant's  rights  under  the Plan,  including  the right to any
         amounts or shares payable,  may not be assigned,  pledged, or otherwise
         transferred  except,  in the  event of a  Participant's  death,  to his
         designated  beneficiary  or, in the absence of such a  designation,  by
         will or the laws of descent and distribution.

4.4      Withholding.

         The  Company  shall  have the right,  before  any  payment is made or a
         certificate  for any shares is  delivered or any shares are credited to
         any brokerage account, to deduct or withhold from any payment under the
         Plan any  Federal,  state,  local or other  taxes,  including  transfer
         taxes,  required by law to be withheld or to require the Participant or
         his  beneficiary or estate,  as the case may be, to pay any amount,  or
         the balance of any amount, required to be withheld.

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         If and to the extent withholding of any Federal,  state or local tax is
         required in connection with the lapse of  restrictions  with respect to
         Restricted   Shares  earned  pursuant  to  Phantom  Share  Units,   the
         Participant  may  elect to pay  such  amount  in cash or:  (i) have the
         Company hold back from the shares to be delivered, stock having a value
         calculated  to  satisfy  such  withholding  obligations;  (ii)  deliver
         previously-owned  shares of Common Stock held by the Participant having
         a value  equal  to the tax  withholding  obligation  provided  that the
         previously  owned  shares  have been held for at least six  months;  or
         (iii) utilize a combination of the foregoing procedures.

4.5      Relationship to Other Benefits.

         No payment  under the Plan shall be taken into  account in  determining
         any benefits under any retirement,  group insurance,  or other employee
         benefit  plan  of  the  Company.   The  Plan  shall  not  preclude  the
         shareholders of Erie , the Board of Directors or any committee thereof,
         or the Company from  authorizing or approving  other  employee  benefit
         plans or forms or incentive compensation, nor shall it limit or prevent
         the continued operation of other incentive  compensation plans or other
         employee benefit plans of the Company or the  participation in any such
         plans by Participants in the Plan.

4.6      No Trust or Fund Created.

         Neither  the Plan nor any  grant  made  hereunder  shall  create  or be
         construed to create a trust or separate fund of any kind or a fiduciary
         relationship between the Company and a Participant or any other person.
         To the extent that any person acquires a right to receive payments from
         the Company  pursuant to a grant under the Plan, such right shall be no
         greater  than  the  right  of any  unsecured  general  creditor  of the
         Company.

4.7      Expenses.

         The expenses of administering the Plan shall be borne by the Company.

4.8      Indemnification.

         Service on the Committee  shall  constitute  service as a member of the
         Board of Directors so that members of the  Committee  shall be entitled
         to  indemnification  and  reimbursement  as  directors  of the  Company
         pursuant to its Articles of Incorporation,  By-Laws,  or resolutions of
         its Board of Directors or shareholders.

4.9      Tax Litigation.

         The Company  shall have the right to contest,  at its expense,  any tax
         ruling or decision,  administrative  or judicial,  on any issue that is
         related to the Plan and that the Company believes to be  important to
         Participants  in the Plan and to conduct any  such  contest  or any
         litigation  arising  therefrom  to a  final decision.

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4.10     Antidulution.

         Phantom  Share  Units  and  Restricted   Shares  shall  be  subject  to
         appropriate  adjustment by the Plan  Administrator as to the number and
         price of shares of Common Stock or other considerations subject to such
         grants in the event of changes in the  outstanding  shares by reason of
         stock  dividends,  stock  splits,  recapitalizations,  reorganizations,
         mergers,  consolidations,  combinations,  exchanges,  or other relevant
         changes in capitalization occurring after the date of grant.


                          5. AMENDMENT AND TERMINATION

         The Board of Directors may modify,  amend, or terminate the Plan at any
         time except that, no  modification,  amendment,  or  termination of the
         Plan shall adversely  affect the rights of a Participant  under a grant
         previously made to him without the consent of such Participant.


                                6. INTERPRETATION

6.1      Governmental and Other Regulations.

         The Plan and any grant  hereunder  shall be subject  to all  applicable
         Federal and state laws, rules, and regulations and to such approvals by
         any regulatory or  governmental  agency that may, in the opinion of the
         counsel for the Company, be required.

6.2      Governing Law.

         The  Plan  shall  be  construed   and  its   provisions   enforced  and
         administered  in  accordance  with  the  laws  of the  Commonwealth  of
         Pennsylvania   applicable  to  contracts  entered  into  and  performed
         entirely in such State.


                   7. EFFECTIVE DATE AND SHAREHOLDER APPROVAL

         The Plan shall be effective as of January 1, 1997.





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