Posted On: October 17, 2004, 11:15 pm CDT

Posted By: John A Consumer

I don't have any first hand experience in the industry. But I would guess that regardless of history, the insurance brokerage business now exists in a grey area. It tries to act as both a sales channel for the large insurers and a bid agent representing the customer. This is a clear conflict of interest that Spitzer is forcing to be resolved. Either be a sales channel .... or be a consulting/bid agent. Taking compensation from both areas leads to the misrepresentation where a customer believes they are recieveing competitive bids, but instead are being sold a high margin product. I would guess that most insiders will fail to see this distinction. If you have trouble understanding whether this is an issue, ask yourself whether auditors should still recieve the kick back business/fees that lead to a lack of oversite... and Enron. The "reasonable" pecent that is obtained during these transactions does not seem like stealing since it is just a bit from each deal. But if misrepresentation is included, then it is the same is inflating stock price to steal a bit from each share holder.