Both the Independent Insur-ance Agents of Oklahoma and the Independent Insurance Agents of Texas reported they have joined other agent groups in denouncing recent assaults on compensation agreements between independent agents and their represented companies. Some national insurance companies and brokers are seeking to end compensation agreements with independent agents in certain states following allegations by federal authorities of bid rigging, the groups say.
A settlement agreement reached by St. Paul Travelers follows similar agreements by American International Group and Zurich, which will potentially place an end to incentive compensation agreements between independent agents and companies they represent for the production of profitable business, the IIAO said. The IIAT added that among other requirements, the St. Paul settlement limits the payment of contingency income, including profit sharing, on certain lines under certain conditions.
“These agreements reflect an assault on legal compensation arrangements used in all types of sales organizations across the United States,” Bruce Magill, IIAO chairman, stated. “Indep-endent agents in Oklahoma and nationwide are the most negatively impacted by these agreements between insurance companies and state attorney generals for New York, Connecticut, and Illinois, yet have had absolutely no say in negotiations. It is unfair and discriminatory to disallow incentive compensation for insurance agents when such arrangements are common with almost every other form of sales organization in the U.S. To penalize all insurance agents is unfair and unreasonable.”
IIAT President-Elect Robert Hempkins said agents are frustrated by the settlement agreements. “Honest agents who are following the law and producing profitable business for their companies should not be punished for the sins of the few. Yet, insurance companies continue to buckle under to the bullying tactics of a handful of ambitious politicians,” Hempkins said in a statement from IIAT.
According to IIAT, the settlement agreements are based on wrong assumptions and unfairly target an innocent group of retail agents.
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