Customers that purchase a financial product or service from any organization without examining how well the product suits/meets all of their needs – including coverages, terms and price – is the problem! Also how do they choose one provider over another? The problem lies in purchasing a service and a product that is too complex for them to feel comfortable with! A large problem is HR or administrative personnel masquerading at large companies masquerading as RMs! Choosing the right broker or agent is important. Not all brokers are created equal and the difference does not lie in the contingent commission they receive (which in most cases is paid at year’s end, and hardly ever factored into the placement of policies since it is usually based upon uncontrollable factors like loss ratios).
It appears this particular group of Risk Managers is uniformed. They should contact the IIABA or Academy of Producer Studies and get the real story on Broker compensation relative to sales volume. It would be an eye opener.
Of course there is a conflict of interest. Why shouldn’t the insurance buyer know how much the broker is beind paid for services? The risk manager knows how much he/she pays the corporate attorney, corporate accountant- why shouldn’t he/she know how much the insurance broker is receiving in commissions and contingent fees? I think full disclosure is in order to include commissions and fees.
Perhaps with full disclosure, the use and availability of “fees for services” will become more commonplace. Let insurance companies quote and issue policies net of commission and have the broker and insurance buyer agree to a stipulated fee for services rendered. There won’t be a conflict of interest issue.
Whiners!!! The contract is between the insurance company and the client. Yes I have contractual obligations with the insurance company AND the client BUT my obligations to the insurance company does not bare on my obligations to the client. Would the client be willing to pay me the contingency he lost my agency to facilitate his coverage if it was his poor management skills that led to a major disaster? I didn’t think so. The arrangement between Brokers and Companies was/is designed to motivate Brokers to place business with one company over another through a reward system. The Client has to FIRST determine whether they want to do business with a Broker then determine if that Broker can do the job then decide on a company that can provide the coverages they desire to be placed hopefully in consultation with the Broker. WE EARN OUR COMMISSION! The contingency is a bonus for placing good profitable business with a company.
Customers that purchase a financial product or service from any organization without examining how well the product suits/meets all of their needs – including coverages, terms and price – is the problem! Also how do they choose one provider over another? The problem lies in purchasing a service and a product that is too complex for them to feel comfortable with! A large problem is HR or administrative personnel masquerading at large companies masquerading as RMs! Choosing the right broker or agent is important. Not all brokers are created equal and the difference does not lie in the contingent commission they receive (which in most cases is paid at year’s end, and hardly ever factored into the placement of policies since it is usually based upon uncontrollable factors like loss ratios).
It appears this particular group of Risk Managers is uniformed. They should contact the IIABA or Academy of Producer Studies and get the real story on Broker compensation relative to sales volume. It would be an eye opener.
Of course there is a conflict of interest. Why shouldn’t the insurance buyer know how much the broker is beind paid for services? The risk manager knows how much he/she pays the corporate attorney, corporate accountant- why shouldn’t he/she know how much the insurance broker is receiving in commissions and contingent fees? I think full disclosure is in order to include commissions and fees.
Perhaps with full disclosure, the use and availability of “fees for services” will become more commonplace. Let insurance companies quote and issue policies net of commission and have the broker and insurance buyer agree to a stipulated fee for services rendered. There won’t be a conflict of interest issue.
Whiners!!! The contract is between the insurance company and the client. Yes I have contractual obligations with the insurance company AND the client BUT my obligations to the insurance company does not bare on my obligations to the client. Would the client be willing to pay me the contingency he lost my agency to facilitate his coverage if it was his poor management skills that led to a major disaster? I didn’t think so. The arrangement between Brokers and Companies was/is designed to motivate Brokers to place business with one company over another through a reward system. The Client has to FIRST determine whether they want to do business with a Broker then determine if that Broker can do the job then decide on a company that can provide the coverages they desire to be placed hopefully in consultation with the Broker. WE EARN OUR COMMISSION! The contingency is a bonus for placing good profitable business with a company.