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: The Good the Bad and the Ugly
Posted On: June 9, 2005, 1:07 pm CDT
Posted By: Agent Who Does Care
Comment:
The basic rule, taught every new agent in licensing school is the law of large numbers. The other is one you learn, it's called caring and compassion for your clients. Some are born with it, others find it the day a client in tears sits in your office to tell you their issues and ask for help. Local agents face their clients every day at school meetings and little league.
There are good bad and ugly facts about this.
There is a big difference between illegal bid rigging, and up front steering of clients to a carriers on "placement" sharing agreements (PSA's), on larger risks where most use consultants and specs, ..... versus rewarding an agent who has gone the extra mile to write good quality personal and small - mid market commercial business with a few carriers, thereby helping keep the overall loss ratios down. This phrase is called "front end underwriting".
Even Mr. Spitzer has acknowledged that contingencies by themselves are not bad.
The problem we face today as "Agents" is that everyone is being lumped together. Agents will on occasion due to market conditions need to "broker" a piece of business to meet client’s demands and needs.. This does not make you a mega broker.
Of the over 40,000 agencies, there are a handful of the top 100 firms that have been fined for actions that already have laws against these in most states.
Most local Agencies don't earn the same as the mega broker, don't charge the fees on both sides, and we'll actually write a motorcycle policy for $200, and spend 20 minutes with the client to get it done. Stupid, maybe, but this is something some firms on the 45th floor of a building can't even consider.
Agents, if you don't think you are about to be touched by this issue, get your heads out of the sand.
The Big guys, now that they many have been caught in the act have found religion, and now some say they’re against "ALL" contingencies. It was not the contingencies but the bid rigging that was the flaming issue. Now they are afraid of a more level playing field.
Rewarding an employee and distributors for a job well after the fact is a natural act. Considering that this has served the US insurance industry very well, and now only after bid rigging are we looking at a handful of firms who took it to new "Bad" and Ugly" heights only proves the old phrase... someone is always going to find a way to test the law. We can’t let those bad apples suck the wind out of an industry that has far more important issues like Health Insurance costs, Terrorism Acts that need to be renewed etc.
Subject: The Good the Bad and the Ugly
There are good bad and ugly facts about this.
There is a big difference between illegal bid rigging, and up front steering of clients to a carriers on "placement" sharing agreements (PSA's), on larger risks where most use consultants and specs, ..... versus rewarding an agent who has gone the extra mile to write good quality personal and small - mid market commercial business with a few carriers, thereby helping keep the overall loss ratios down. This phrase is called "front end underwriting".
Even Mr. Spitzer has acknowledged that contingencies by themselves are not bad.
The problem we face today as "Agents" is that everyone is being lumped together. Agents will on occasion due to market conditions need to "broker" a piece of business to meet client’s demands and needs.. This does not make you a mega broker.
Of the over 40,000 agencies, there are a handful of the top 100 firms that have been fined for actions that already have laws against these in most states.
Most local Agencies don't earn the same as the mega broker, don't charge the fees on both sides, and we'll actually write a motorcycle policy for $200, and spend 20 minutes with the client to get it done. Stupid, maybe, but this is something some firms on the 45th floor of a building can't even consider.
Agents, if you don't think you are about to be touched by this issue, get your heads out of the sand.
The Big guys, now that they many have been caught in the act have found religion, and now some say they’re against "ALL" contingencies. It was not the contingencies but the bid rigging that was the flaming issue. Now they are afraid of a more level playing field.
Rewarding an employee and distributors for a job well after the fact is a natural act. Considering that this has served the US insurance industry very well, and now only after bid rigging are we looking at a handful of firms who took it to new "Bad" and Ugly" heights only proves the old phrase... someone is always going to find a way to test the law. We can’t let those bad apples suck the wind out of an industry that has far more important issues like Health Insurance costs, Terrorism Acts that need to be renewed etc.