Wharton Study Finds Agents, Brokers Play Critical Role in Buying Process
National News • June 8, 2005
Profit-based contingent commissions align the interests of independent agents and brokers and the insurer so that correct pricing of policies is achieved, thereby alleviating adverse selection, ...
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Subject: Wharton Study Biased Like All Industry Sponsored Studies
Posted On: June 8, 2005, 4:42 pm CDT
Posted By: Don P
Comment:
All industry sponsored studies tend to justify the conclusions of the trade group that sponsor them...so no surprise that they have come up with data that will support these conclusions...any well paid consultant or academic can come up with a carefully crafted support paper, but I am waiting for an independent study sponsored by a consumer group that shows impact on the ultimate consumer of insurance and investors. After all, that is what these investigations into contingents, price fixing, finite reinsurance and other reserve manipulation techniquest are all about.
Personally, I disagree with the conclusions. I know from experience that the contingents and profit sharing influence what insurance will be sold to the mid-sized consumer, and it made me very uncomfortable for the 25 years I worked at a mid-sized firm. The same has been shown to occur on a larger scale with large managed risks. The only solution is a policy holder service fee arrangement and an end to commissions. Commissions have served their purpose over the years the industry developed and matured (I worked in a firm with roots in the 19th century) but they haved outlived their usefulness.
Subject: Wharton Study Biased Like All Industry Sponsored Studies
Personally, I disagree with the conclusions. I know from experience that the contingents and profit sharing influence what insurance will be sold to the mid-sized consumer, and it made me very uncomfortable for the 25 years I worked at a mid-sized firm. The same has been shown to occur on a larger scale with large managed risks. The only solution is a policy holder service fee arrangement and an end to commissions. Commissions have served their purpose over the years the industry developed and matured (I worked in a firm with roots in the 19th century) but they haved outlived their usefulness.