Impact of Spitzer Broker Fraud Charges Felt at Marsh and Beyond
National News • October 18, 2004
New York Attorney General Eliot Spitzer's filing last Thursday of charges against giant insurance broker Marsh for alleged commercial account steering and bid rigging has already had significant ...
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Subject: RE: RE: RE: Spitzers insurance investigation and chargess
Posted On: October 18, 2004, 3:12 pm CDT
Posted By: Chris
Comment:
Steve hits the nail on the head.
Any time there is a commission paid based upon amounts of product sold, and "extra" commissions if the "right" product is sold, then, regardless of the industry, there is the chance for unethical behavior. One only has to recall the "bait and switch" allegations in the major home appliance sales industry in the 70's to see that.
As I understand the crime as alleged, Marsh supposedly used threats to carriers of lost access to Marsh clients in order to one, wring increased contingent commissions out of said carriers, and two, ensure that they could meet the production levels set in the commission agreements to Marsh's maximum advantage.
What I don't see in the allegations is any intent on Marsh's part to make the "system" inure to the benefit of their clients (except possibly those who they forced some otherwise unwilling carrier to underwrite because no one else would), or the carriers (although, by default, some may have benefitted by getting some profitable business they otherwise would not).
So, while the argument against accepting client fees and carrier commissions raises the specter of serving two masters, which in CPCU 1 we all learned we can't do, it seems to me that the allegation here is that Marsh was serving only itself, treating all others with disdain.
As I see it, there are two immediate challenges to brokers. The first is to prove that they are serving their true master, whether fees are paid by the client or the carrier. The second is to prove that, in best representing their client, the purchaser, they also provide a value added service to the carriers they place business with, which, rightfully, the carrier should pay for.
Subject: RE: RE: RE: Spitzers insurance investigation and chargess
Any time there is a commission paid based upon amounts of product sold, and "extra" commissions if the "right" product is sold, then, regardless of the industry, there is the chance for unethical behavior. One only has to recall the "bait and switch" allegations in the major home appliance sales industry in the 70's to see that.
As I understand the crime as alleged, Marsh supposedly used threats to carriers of lost access to Marsh clients in order to one, wring increased contingent commissions out of said carriers, and two, ensure that they could meet the production levels set in the commission agreements to Marsh's maximum advantage.
What I don't see in the allegations is any intent on Marsh's part to make the "system" inure to the benefit of their clients (except possibly those who they forced some otherwise unwilling carrier to underwrite because no one else would), or the carriers (although, by default, some may have benefitted by getting some profitable business they otherwise would not).
So, while the argument against accepting client fees and carrier commissions raises the specter of serving two masters, which in CPCU 1 we all learned we can't do, it seems to me that the allegation here is that Marsh was serving only itself, treating all others with disdain.
As I see it, there are two immediate challenges to brokers. The first is to prove that they are serving their true master, whether fees are paid by the client or the carrier. The second is to prove that, in best representing their client, the purchaser, they also provide a value added service to the carriers they place business with, which, rightfully, the carrier should pay for.