June 14, 2004 by Canadian Underwriter
The contingent commission investigation by New York Attorney General Eliot Spitzer has now been extended to insurers, with Chubb, Hartford Aetna and MetLife confirming they have been subpoenaed. Each company has issued a brief statement Chubb’s coming in May, and the rest following just last week stating that they had been subpoenaed and would cooperate fully with the investigation. Reuters also cites Cigna Corp. as receiving a subpoena. This moves the investigation beyond p&c insurance to take in the life and health sectors.
Spitzer is looking into potential conflict of interest in regards to brokers’ contingent commissions, commissions paid based on profitability of the business placed with the broker. The Risk & Insurance Management Society (RIMS), which had signed an agreement on the proper use and disclosure of contingent commissions with brokers some years ago, has set up a task force to address concerns.
A recent survey indicates many brokers feel they are not fully informed about the nature of the contingent commissions their brokers receive, although most felt their broker was not influenced to place business with a specific insurer by such agreements.
Marsh, Aon, Willis and Kaye Insurance Brokers were subpoenaed earlier in the year, to provide information on their compensation agreements with insurers. Other states including Connecticut and California have also announced investigations into commission agreements.