Study: Spitzer Probe to Reduce Brokers’ Bottom Line

November 16, 2004

  • November 17, 2004 at 1:29 am
    marnie says:
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    It might be 25% for Marsh and Aon, but for 99% of insurance agents and brokers, contingent commissions and profit sharing account for a minimum of 50% and up to and exceeding 100%.

    If contingent commissions are eliminated and not replaced with higher up front commissions, profits of the vast majority of insurance agents will disappear. Furthermore, this will impact their working capital making it likely that they will be unable to pay their monthly accounts current to insurance carriers. So, not only will agents be adversely affected, carriers will suffer too.

    This kind of upheaval will result in turmoil that will affect millions of insured customers. So, fasten your seat belts. It will not be pretty.

  • November 17, 2004 at 2:06 am
    Pat says:
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    Looks like a great time to be a direct writer. Is it good for the consumer to drive the market to direct writers? Who will be the insured’s advocate when a claim comes along, or for that matter, when a renewal premium increase comes along?

    …Wonder what would happen if the AG decided to look at price fixing in the oil business…

  • November 17, 2004 at 2:27 am
    xsman17 says:
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    Well the lower paid people are going to get even lower wages if they are luck enough to have a job. Way to go Mr. Spitzer. You have have done a whole lot for people, hey you should govenor maybe even president!

  • November 17, 2004 at 2:54 am
    David Newell says:
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    Self-serving lugubrious whines missing the point:

    why am I not surprised..

    If I’d knowed I wuz gunna beCOME a broker, I wouldn’ta had such a low opine of the breed when I wuz a company guy:

    oh well: my opinion has not changed much, I regret to note…

    as regards..
    “”The only option available to high performing firms are to attempt to supplement lost income through an effective acquisition strategy…”

    now THERE’s an “economy of scale” threat whose effect will be felt by all agency and brokerage clones who pretend to provide value added to the commodity transactions which constituted the great majority of sales…..

    And, I will speculate that the “maintenance of cash flow” derived from such a strategy, will be a short-time solace: sell your brokerage stocks short: their value is going down.

    Of course, this opinion is speculative: no obligation is incurred herein by it’s expression: no warrant of accuracy is implied: etc…..

  • November 17, 2004 at 3:59 am
    ken says:
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    Marnies comments are right on target. Its easy for Marsh to dealwith the problem, they just lay off 3,000 unsuspecting employees who had absolutely nothing to do with the problem in the first place. Small to mid sized agencys who lose 50-100% of their profit through lost contingencies are unwilling or unable to respond with massive layoffs, which is really the only way to dramatically reduce the expense side. There may be more compelling reasons than ever to sell now, and capitalize on the big firms need to acquire cash flow.

  • November 30, 2004 at 11:28 am
    Interested observer says:
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    I’ve noticed that WFG’s opinions are frequently sought and their publications given prominence by Insurance Journal reporters.

    I’ve also noted that, no matter what the subject, WFG winds up predicting an increase in M&A activity.

    To provide some perspective, I suggest that IJ disclose that WFG primary source of revenue is consulting on M&A deals.



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