Posted On: February 1, 2005, 4:25 pm CST

Posted By: InsMgmt

Let me see if I understand this issue. Contingent commissions, which are paid out to brokers in a profit sharing scheme, sponsored by an insurer as a result of the broker placing profitable accounts with the carrier, are deemed to be evidence of a breach of fiduciary responsibility on the part of the broker, simply because the commissions represent monies that might have been used to reduce the cost of risk for the insured?

Using that logic, then all profit sharing arrangements in the economy should be banned and such profits returned to the consumer.

Further, placing a greater number of accounts with a carrier in order to develop the profit ratio needed to develop contingent commissions is considered to be bid rigging?

I would not want to be one to point a finger, but this sounds a lot like politicians sponsoring legislation giving minority voters special status when applying for government contracts.

So, this issue, which has harmed hundreds of downline employees at Marsh, and will have an impact on the profitability of thousands of small and mid-sized insurance brokerages/agencies, is simply an attempt on the part of an aggressive politician seeking to gain national recognition?

What's next? Will an enterprising attorney take on Wall Street for brokering stocks, which are, after all, simply profit sharing schemes developed by corporations seeking to increase capital and revenue streams?

Who said Marx is dead?