RIMS calls for higher standards of revenue disclosure from brokers

The Risk and Insurance Management Society (RIMS) is calling for complete transparency and full disclosure of all revenue streams associated with the placement of insurance products.
A new RIMS report, A Practical Guide to Insurance Broker Compensation and Potential Conflicts of Interest for the Risk Manager, is intended to serve as a guide to assist risk managers in understanding insurance broker compensation and potential conflicts of interest.
The goal is to heighten awareness of the potential pitfalls surrounding the insurance purchase transaction. This knowledge would empower RIMS members to press for greater transparency in negotiations with brokers as well as for regulatory reform, RIMS says.
“In ideal settings, insurance brokers and risk managers are working very closely toward a common goal — marketing the insured’s coverage to achieve optimal results within the commercial insurance market,” Deborah Luthi, director of RIMS’ external affairs committee and director of enterprise risk management at Matheson, Inc., says in a release. “However, because the industry has yet to mandate full disclosure, risk managers must be diligent in their broker selection process. This report gives them the tools they need, not only to successfully make that selection, but to drive a higher standard of conduct industry-wide.”  
Any compensation to the broker from insurers with whom the broker places client business must be transparent or eliminated altogether, thus ensuring brokers are acting solely in the interest of their client, the report stresses.
The report also looks at:
•    an extensive outline of insurance broker compensation types;
•    tips for crafting an effective request for proposal; and
•    recommendations for delineating services to be provided and associated charges within a Service Level Agreement (SLA).