April 24, 2005 by Canadian Underwriter
Groups representing brokers and agents in the U.S. have come to blows following a speech at the recent Risk & Insurance Management Society (RIMS) Conference by Willis CEO Joe Plumeri.
In the speech, Plumeri said contingent commissions should be abolished for all intermediaries, including both agents and brokers. The National Association of Professional Insurance Agents (PIA) took umbrage with Plumeri’s comments, with PIA CEO Leonard Brevik arguing, “this is a hypocritical suggestion, in that it comes from the CEO of the nation’s third-largest insurance broker a firm that earlier this month agreed to pay US$51 million in restitution to policyholders to resolve concerns about anti-competitive practices involving incentive fees in property and casualty insurance sales. The timing of Mr. Plumeri’s comments makes them particularly dubious.”
Agents, with some support from insurer groups, have argued that they should not be included in any regulations regarding contingent commissions as they work only for one insurance company. In the PIA statement, Brevik says of Plumeri’s comments: “One mega-brokers experiences should not be extended to pontifications regarding the entire industry.”
However, the Council of Insurance Agents and Brokers (CIAB) says Brevik and the PIA are “missing the point entirely”, which is about transparency and disclosure of compensation. Rules about disclosure should apply equally to all intermediaries, CIAB president Ken Crerar argues. “PIA and others seem to think that transparency is good only for some commercial insurance transactions. The sooner industry groups stop finger-pointing and disparaging one another and support a standard for compensation disclosure such as the NAIC (National Association of Insurance Commissioners) model law the more trust we’ll earn from consumers, and we can all move on. We have nothing to hide.”