Mr. Bonsignore needs a better understanding of the insurance industry, if he believes that this so called “bid rigging” is the basis for rate increases. I suggest he might look at the past decade and a half of market share underwriting, inadequate reserving practices and perhaps “managing profit” by a vast majority of the insurance industry, which by the way, should have created any number of SEC formal questions, not to mention economic loss by shareholders. Bid rigging isn’t going to have sufficient posture to do anything other than make a mouse squeek.
Bid rigging is illegal, of this there is no question, but to raise the bar on this sort of suit, makes one wonder what his agenda truly is.
You silly person. Every perons on this planet has an agenda, including you! However, his agenda is of the correct type. Mr. Bonsignore is 100% correct to go after ALL illegal activities that pertain within his authority. You siily person.
As a broker, I applaud Mr. Bonsignore. The large, public firms refuse to admit that they serve their own interests first and foremost. They claim to look out for the client’s interests first, but their fiduciary responsibility lies to their shareholders. That demands that they drive revenue up, not matter that it could be a detriment to the client.
Contingent commissions are not illegal. But the bid-rigging is. And I suspect it went on more than anyone at the “big boys” will admit. As an industry, we need to come clean and serve only one master, the client!
In answer to the unidentified person who decided I’m a “silly person”, as well as Mr. Bonsignore, at no time did I suggest that the full application of the law was not proper. It is. Bid rigging is illegal, and due process to the full extent is necessary.
Nor did I become involved with contingent commissions which have been in place for some 50 plus years. They are in fact a source of revenue for almost every agent and broker in these United States. It is unfortunate however, that they have become part and parcel of this overall legal situation having to do with bid rigging. One really has nothing to do with the other.
I’ve been in this industry as a senior executive for almost 50 years, and frankly am tired of the machinations of the
industry both pro and con. If you’re interested in my bio go to IRMI, I’m a contract writer for them on market practices.
My point quite simply is that given what is a limited amount of bid rigging which is attributed at this juncture to Marsh, begs the question of how much economic loss did any single or group of their client base physically loose? It the client base suffered economic loss then there might exist potential for recovery by them. However, did bid rigging physically cause loss, or was it simply a methodology for Marsh to find ways to increase their own profit margin.
One would have to look at individual risks, the market at the time of placement, and in fact, did the client, most of whom I suspect were knowledgeable, accept programs in which they were unhappy with the outcome.
To suggest, as I initially posted, that bid rigging was a incremental part of the insurance markets poor performance over the past decade and a half, has no bearing, it has not a whit to do with it.
Let’s keep fact and fiction separated, go after those whose performance violates the law is with absolute justificiation, but let’s put an end to dumping everything into one pot.
Peter, your 50 years has me hands down with only 27. Though third generation should count for something genetic (ps Dad says “hello”!).
The problem with contingencies – as I see it – is what happens when a broker ‘recommends’ one carrier over another, with the sub-rasa anticipation that an order would be given to one carrier in the unspoken hope to “nail” the contingency check? There aren’t enough premium dollars to feed all the carrier commitments, especially in a softening market.
Another problem is when a broker presents a quote or quotes without completely identifying the subtle differences in non-ISO wordings, particularly when the ‘most competitive’ option is from a contingency-promising underwriter. The only method of measuring true loss to the unknowing – though perhaps not innocent buyer who should have demanded a full comparison – is if a loss occures that would have been covered differently under Carrier B’s form.
Not all carriers adjust the same loss in the same way, even on the same form, and there could be further hardship just waiting for the recovery from the carrier.
At what point does this become an E&O issue for the broker – and would intent preclude an E&O payment?
You are right – all brokers and agents with carrier contracts came to depend upon contingencies as ‘supplemental’, post-operating income. I’m sure someone will invent a non-commission-derived method for recouping this loss. But MMC proved that you can’t net-premium bill and fee-base clients in CT in anticipation of a contingency check; it’s one or the other.
Hey Chris – good to hear from you, say hello to your Dad, hope all’s well.
Your right to a degree, but in the case of Marsh, AON ( ex A&A) Willis, and brokers of that ilk and kin, they have, or had, or may still have, contingency agreements with just about every carrier they’re dealing with in one fashion or another. For the smaller houses, they too have substantial agreements with their major carriers. Because of the potential of additional income from contingency, it really is unlikely, that one carrier vs another would have a great deal of weight, but it is possible.
From a terms and conditions standpoint, the so called alphabet houses while using ISO covers, generally utilize a fair portion of their own forms, manuscript in nature ( rightly or not ) and irrespective of form, are necessarily bound by good risk management practice to disclose to prospective or current client base, the differentials between forms.
None disclosure can only lead at some point in time to a significant E&O suit. I can remember vividly a broker who wrote the insured that the excess placement was
“basically follow form” that was fun.
Mr. Bonsignore needs a better understanding of the insurance industry, if he believes that this so called “bid rigging” is the basis for rate increases. I suggest he might look at the past decade and a half of market share underwriting, inadequate reserving practices and perhaps “managing profit” by a vast majority of the insurance industry, which by the way, should have created any number of SEC formal questions, not to mention economic loss by shareholders. Bid rigging isn’t going to have sufficient posture to do anything other than make a mouse squeek.
Bid rigging is illegal, of this there is no question, but to raise the bar on this sort of suit, makes one wonder what his agenda truly is.
I am always willing to listen and learn. The corruption needs a cleansing.
You silly person. Every perons on this planet has an agenda, including you! However, his agenda is of the correct type. Mr. Bonsignore is 100% correct to go after ALL illegal activities that pertain within his authority. You siily person.
As a broker, I applaud Mr. Bonsignore. The large, public firms refuse to admit that they serve their own interests first and foremost. They claim to look out for the client’s interests first, but their fiduciary responsibility lies to their shareholders. That demands that they drive revenue up, not matter that it could be a detriment to the client.
Contingent commissions are not illegal. But the bid-rigging is. And I suspect it went on more than anyone at the “big boys” will admit. As an industry, we need to come clean and serve only one master, the client!
In answer to the unidentified person who decided I’m a “silly person”, as well as Mr. Bonsignore, at no time did I suggest that the full application of the law was not proper. It is. Bid rigging is illegal, and due process to the full extent is necessary.
Nor did I become involved with contingent commissions which have been in place for some 50 plus years. They are in fact a source of revenue for almost every agent and broker in these United States. It is unfortunate however, that they have become part and parcel of this overall legal situation having to do with bid rigging. One really has nothing to do with the other.
I’ve been in this industry as a senior executive for almost 50 years, and frankly am tired of the machinations of the
industry both pro and con. If you’re interested in my bio go to IRMI, I’m a contract writer for them on market practices.
My point quite simply is that given what is a limited amount of bid rigging which is attributed at this juncture to Marsh, begs the question of how much economic loss did any single or group of their client base physically loose? It the client base suffered economic loss then there might exist potential for recovery by them. However, did bid rigging physically cause loss, or was it simply a methodology for Marsh to find ways to increase their own profit margin.
One would have to look at individual risks, the market at the time of placement, and in fact, did the client, most of whom I suspect were knowledgeable, accept programs in which they were unhappy with the outcome.
To suggest, as I initially posted, that bid rigging was a incremental part of the insurance markets poor performance over the past decade and a half, has no bearing, it has not a whit to do with it.
Let’s keep fact and fiction separated, go after those whose performance violates the law is with absolute justificiation, but let’s put an end to dumping everything into one pot.
Peter, your 50 years has me hands down with only 27. Though third generation should count for something genetic (ps Dad says “hello”!).
The problem with contingencies – as I see it – is what happens when a broker ‘recommends’ one carrier over another, with the sub-rasa anticipation that an order would be given to one carrier in the unspoken hope to “nail” the contingency check? There aren’t enough premium dollars to feed all the carrier commitments, especially in a softening market.
Another problem is when a broker presents a quote or quotes without completely identifying the subtle differences in non-ISO wordings, particularly when the ‘most competitive’ option is from a contingency-promising underwriter. The only method of measuring true loss to the unknowing – though perhaps not innocent buyer who should have demanded a full comparison – is if a loss occures that would have been covered differently under Carrier B’s form.
Not all carriers adjust the same loss in the same way, even on the same form, and there could be further hardship just waiting for the recovery from the carrier.
At what point does this become an E&O issue for the broker – and would intent preclude an E&O payment?
You are right – all brokers and agents with carrier contracts came to depend upon contingencies as ‘supplemental’, post-operating income. I’m sure someone will invent a non-commission-derived method for recouping this loss. But MMC proved that you can’t net-premium bill and fee-base clients in CT in anticipation of a contingency check; it’s one or the other.
Best regards!
Hey Chris – good to hear from you, say hello to your Dad, hope all’s well.
Your right to a degree, but in the case of Marsh, AON ( ex A&A) Willis, and brokers of that ilk and kin, they have, or had, or may still have, contingency agreements with just about every carrier they’re dealing with in one fashion or another. For the smaller houses, they too have substantial agreements with their major carriers. Because of the potential of additional income from contingency, it really is unlikely, that one carrier vs another would have a great deal of weight, but it is possible.
From a terms and conditions standpoint, the so called alphabet houses while using ISO covers, generally utilize a fair portion of their own forms, manuscript in nature ( rightly or not ) and irrespective of form, are necessarily bound by good risk management practice to disclose to prospective or current client base, the differentials between forms.
None disclosure can only lead at some point in time to a significant E&O suit. I can remember vividly a broker who wrote the insured that the excess placement was
“basically follow form” that was fun.
Pete