What’s new: In brief (December 01, 2004)

The Property & Casualty Insurance Compensation Corp. (PACICC) has joined together with other financial services insolvency groups to launch a new website for consumers. The site, www.financeprotection.ca, includes information on PACICC, as well as compensation plans for savings, investments and life/health insurance.

The New York Assembly’s Standing Committee on Insurance has scheduled hearings for December 6 on what it calls “brokergate”. The hearings will further investigate allegations raised by New York Attorney General Eliot Spitzer in his ongoing probe into bid-rigging and commission practices. Among the questions to be addressed by those testifying at the hearings will be what legislative actions should be taken to deal with the activities alleged by Spitzer. It will also address the implications of the scandal for state-based insurance regulation.

Federal regulation could receive a big boost from the current broker compensation scandal, according to a survey of attendees to the 16th annual Executive Conference in New York this week. At the same time, attendees think there will be a widespread move away from commissions based on volume and profitability, with 46% saying future compensation will include traditional commissions with expense reimbursements. Underwriters could feel the pinch in a new regulatory model for broking which attendees predict will be more focused on achieving the lowest cost coverage and narrower profit margins for insurers.