St. Paul Settles with Conn,. Ill., N.Y. Attorneys General Over Broker Compensation
National News • August 1, 2006
The St. Paul Travelers Companies Inc. has entered into a $77 million settlement with the attorneys general of New York, Connecticut and Illinois, as well as with the New York State Department of ...
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Subject: A different perspective ?
Posted On: August 7, 2006, 3:06 pm CDT
Posted By: Underwriter
Comment:
As a long time underwriter, who was an agent (for a direct writer) years ago, then an underwriter for the same national company before going to a regional; there are a number of twists on logic here. They border on crazy.
There are already many good laws (remember those?) and regulations (those are good too) that already deal with bid rigging and disclosure when appropriate. What happened to those ? Because the states had trouble enforced existing laws, the whole business now suffers ? Notice that in most of these cases it was certain classes of business that had the bid rigging performed ?
If you are found guilty of a crime (law is on the books) you pay the price. Your next door neighbor does not go to jail for knowing you. Now if you settle out of court (plea) then you certainly cannot make a plea that condemns your neighbor and all business associates as well. AG's seem to paint a whole business at once, and the carriers are putting a burden on my Agents. Through settlements (not laws) the large carriers are creating new regulations. Is that not the job of an insurance dept ? So i ask a question. If the original insurance dept and regulators could not get the carrier to abide by existing laws and regulations, what resources will enforce it now ?
I have already heard from some agents who will consider moving move business to Regionals - not only for money reasons but because they really feel betrayed.
Profit sharing ? a bad thing ? good agents who inspect properties, get to know their clients and are the "eyes on the ground" do a better good job, so shouldn't there be a connection to the compensation. It is good for carriers and consumers. Underwriters all have Agents we know we can trust. When they say they saw a risk, we know they did, and those agents don't give us dogs when they know it's a downside. Now agents may not want to hear this, but I could fire half our plan and still get the quality business I need. Big carriers can't do business the same way we do.
Many of my underwriter associates have had some firms (we know who they are) ask us for a declination, or price. It is not the little guys who are rating our BOP online.
You say we need "Transparency", then why only on an agent ? how about full transparency. That means a breakdown for every carrier (Including Geico, and every direct writer) that requires loss costs, profit, expenses and acquisition costs (including advertising) printed on the policy as an attachment called "Transparency". Anything else is false and still leaves room for the bad guys to be bad. Since MGA's and Wholesalers seemed to have bye on disclosure, I see creative firms using their owned wholesalers to hide the level of compensation received. So a 25% deal now looks like a 10% deal to the consumer. After all, bad guys will be bad. I know what we pay Wholesalers who have subproducers versus appointed Agents, so how will a proposal ever look the same from both ? What about aggregators ? are they considered Wholesalers ?
Of the 40,000 plus agents, who write main street USA for $750 and the local homeowners for $400 - I bet that few had any involvement in these issues. The agents who never had the special deals are now hit twice, once through a change in compensation, and second by association with carriers who now admit to bad practices.
Thankfully my company does not seem to have been involved (yet) and hope that our profit sharing continues to reward those agents who take the time to do the best job possible for the consumer.
Finally when I do a good job, I expect a bonus. Do the AG's get bonuses ? When did that become a bad thing ?
Subject: A different perspective ?
There are already many good laws (remember those?) and regulations (those are good too) that already deal with bid rigging and disclosure when appropriate. What happened to those ? Because the states had trouble enforced existing laws, the whole business now suffers ? Notice that in most of these cases it was certain classes of business that had the bid rigging performed ?
If you are found guilty of a crime (law is on the books) you pay the price. Your next door neighbor does not go to jail for knowing you. Now if you settle out of court (plea) then you certainly cannot make a plea that condemns your neighbor and all business associates as well. AG's seem to paint a whole business at once, and the carriers are putting a burden on my Agents. Through settlements (not laws) the large carriers are creating new regulations. Is that not the job of an insurance dept ? So i ask a question. If the original insurance dept and regulators could not get the carrier to abide by existing laws and regulations, what resources will enforce it now ?
I have already heard from some agents who will consider moving move business to Regionals - not only for money reasons but because they really feel betrayed.
Profit sharing ? a bad thing ? good agents who inspect properties, get to know their clients and are the "eyes on the ground" do a better good job, so shouldn't there be a connection to the compensation. It is good for carriers and consumers. Underwriters all have Agents we know we can trust. When they say they saw a risk, we know they did, and those agents don't give us dogs when they know it's a downside. Now agents may not want to hear this, but I could fire half our plan and still get the quality business I need. Big carriers can't do business the same way we do.
Many of my underwriter associates have had some firms (we know who they are) ask us for a declination, or price. It is not the little guys who are rating our BOP online.
You say we need "Transparency", then why only on an agent ? how about full transparency. That means a breakdown for every carrier (Including Geico, and every direct writer) that requires loss costs, profit, expenses and acquisition costs (including advertising) printed on the policy as an attachment called "Transparency". Anything else is false and still leaves room for the bad guys to be bad. Since MGA's and Wholesalers seemed to have bye on disclosure, I see creative firms using their owned wholesalers to hide the level of compensation received. So a 25% deal now looks like a 10% deal to the consumer. After all, bad guys will be bad. I know what we pay Wholesalers who have subproducers versus appointed Agents, so how will a proposal ever look the same from both ? What about aggregators ? are they considered Wholesalers ?
Of the 40,000 plus agents, who write main street USA for $750 and the local homeowners for $400 - I bet that few had any involvement in these issues. The agents who never had the special deals are now hit twice, once through a change in compensation, and second by association with carriers who now admit to bad practices.
Thankfully my company does not seem to have been involved (yet) and hope that our profit sharing continues to reward those agents who take the time to do the best job possible for the consumer.
Finally when I do a good job, I expect a bonus. Do the AG's get bonuses ? When did that become a bad thing ?