Posted On: December 1, 2006, 3:00 pm CST

Posted By: Bob

Part of the reality is that this action has little or no affect on a large number of carriers. Independent agencies who represent a Travelers or AIG for home and auto probably represent a number of regional companies as well. I think the number is 3-4 regionals to one National. As long as this is the case the major nationals will find themselves trying to be even more competitive with regionals that can be faster to market, and more responsive to local agents. Travelers will need to find a way to deal with the loss of revenue, and we should expect some increased commissions for all in the short run. If this catches on then Regionals will need to voluntarily raise their base rates as well.

Perhaps this is a move for the AG's to promote disclosure by making it easier to understand, since there will be no complicated formulas.

What keeps being missed is Consumers don't care today what an agent earns, they care what their premium is. Once we start creating an illusion that the percent commission is valuable information and part of a decision process then it suggests a carrier that pays less commission is a better choice. We will head down a very bad road for the consumer.

Finally also getting lost is that it is a small handful of AG's, there are some states that see no value at all at the insurance department level, and in some states the requirements are against current regulations. There is an old phrase if you can't legislate, regulate and if you can't succeed there, litigate.

With so many valuable real issues around capacity, availability, flood, wind, coverage details, expenses, fraud etc... it's amazing so much effort (money) is being spent here.