Producers should no longer expect contingent commissions from American International Group, according to the settlement with New York Attorney General Spitzer and what the company says is its own global policy now.
Spitzer’s announcement stated that “AIG has agreed to stop paying such commissions in any line of insurance where companies with 65 percent of gross written premiums do not do so.”
AIG CEO Martin Sullivan made his firm’s policy clear in a conference call. “Well, let me say straightaway that currently, we are not paying contingent commissions to brokers and we won’t be paying them and we have no plans to pay them. What the agreement says is that if 65 percent of the market agrees not to pay contingent commissions in any line of business, then obviously, AIG will agree not to pay contingent commissions. That is what the agreement says and that is what we’ll do,” Sullivan said in answer to a question from Paul Newsome, analyst from A.G. Edwards.
“But presumably, you could start paying contingent commissions in lines that don’t meet that threshold at some point in the future?” Newsome then asked.
“You’re absolutely correct. We could, but we’re not,” Sullivan answered.
The New York State Insurance Department is not a party to the contingent commission restrictions because its chief disagrees with the approach taken. Insurance Superintendent Howard Mills “believes that the issue of contingent commissions should be addressed by legislation,” and for that reason the department did not address contingencies in its own agreement with AIG, according to NYSID spokesman, Michael Barry.
Was this article valuable?
Here are more articles you may enjoy.
Uncertainty Keeps Prices Up; No Prior-Year Loss Development: Travelers 
Cargo Owners in Baltimore Disaster Face ‘General Average’ Loss Sharing, MSC Says 
North Carolina Adjuster and Son Charged With Embezzlement in Roof Jobs 
Wildfires Are Upending Some of the Safest Bets on Wall Street From This Issue
