Posted On: January 27, 2005, 10:55 am CST

Posted By: Alan

I worked as a personal insurance agent for many years, and most of the potential clients cared only about the lowest rate we could offer; the personal lines transaction was treated by the consumer as a pure commodity transaction. Most, if not all, of the people that called in for quotes collected quotes from a number of agents which reduced if not eliminated an agents ability to steer business. If we offered anything other than the lowest possible price for the coverage they requested, they went elsewhere. With literally hundreds of agents plus the many direct writers in most markets, personal lines insurance is very competitive.

As a commercial insurance broker I am all for the elimination of contingent commission. Since I am not an owner in the agency I do not share in the contingent commissions. If the agency loses this source of additional revenue, we will be adding fees for the extra services we provide, and I do get a share of fee income. The direct impact of eliminating contingent commissions will the INCREASE in direct cost to the consumer or a reduction in service(s) available.

Bid rigging is a whole different situation as it is illegal, and those found guilty should face criminal prosecution.

Alan.

PS Next time you speak to the owner of an auto dealership ask them if they get ANY additional compensation from the manufacturer at the end of the year based on their sales. Should this form of compensation also be investigated?