Immagine that lower margins, higher premiums and complete transparancy for customers….what a novel idea! We have been telling our customers exactly what we make on their account for years. Its a lot of money and they will pay a lot of money to some agent or broker. We want them to know how much so they can measure our services against our competitors and see who earns those bucks.
I think what will ultimately happen is that carriers will be forced to increase straightforward commission percentages and as the market softens more, then the carriers will start competing for more business by increasing these commission rates rather than reduce premiums. Does this benefit the Insured?
I feel that federal oversight of the insurance industry must be a balancing act between micro management and enforcement of laws. My own view is that federal oversight of our industry should concentrate primarily on insurance carrier and reinsurer solvency. We should request that our elected officials take a look at some of our overseas competitors as well.
Once the companies move away from Profit Sharing, they will remove all incentives for agents to write profitable business thus they should expect inordinate increases in losses.
When the agents lose their incentive to properly educate and help their insured’s cut exposures etc, claims will soar. Some companies may find this opportunity to increase their profitability by cutting incentive payments to their agents very attractive, it will blow up in their face.
Hopefully the more astute companies will realize that the Profit Sharing incentive really works to their advantage in that their underwritng results actually add to their bottom line.
This is no time for Company shortsighteness and greed to step into the heat of the battle over semantics and a general misunderstanding or lack of any understanding that is so pervasive with certain regulators as to how the insurance business has been transacted over many decades very successfully.
For a company to try to save around 2% of their premium by eliminating these incentives, they will be spending much more than that explaining to their shareholders why their losses are soaring beyond any acturial assumptions.
Remove all incentives for agents to write profitable business???? Agents loose their incentive to educate and help insured’s cut exposure???? 2% loss to agents. WOW!! What happened to professionalism and commitment to good business for everyone. You mean you will through out your commitment to both companies and customers for 2%. You give up pretty cheaply. We don’t have incentives; never have. I think the solution is for all coverages to be sold net and the agent/broker justifies their place at the table based on the value they bring and the fee they can negotiate. The bad get nothing; the good get more and the exceptional get the most.
Mr. Howse, whoever you may be; if the greed of a few Brokers who defrauded their clients by taking fees from them and receiving undeiclosed Contingent Commission from a few companies for the placement of business upfront was not uncovered by AG Spitzer, our industry would not be going through this very unneccesary upheaval.
I am certainly pleased to know that you for one was not one of those Brokers. That certainly elevates my appreciation for the honest Broker and not the Shister Brokers who got caught with their hands in the cookie jar!
P. S. I am not sure I would want my companies or customers to know that I would go over to the dark side for 2%. It might make them wonder about some character issues better left unpublished on the Insurance Journal.
I disagree with Jim’s comment about the tiered rewards for agents negotiatiions with their efficiency – all that will happen is that the same big brokers will use their muscle with carriers to sqeeze the best deal/cheapest price out of them to look the best to the client – should they be rewarded the most because it is perceived exceptional because they got the best terms on the back of a promisd huge premium base to the carrier?
Gentlemen, let’s get away from the veiled shots at each other. That’s exactly what they are hoping for. Divide and conquer.
You both have a point. I can see where the smaller agents might think that way, and guys who have no direct appointments might too. However the loss ratio isn’t going away unless some legislator figures out that it keeps agents from writing business. If they passed a law that said there will be no penalty for the agent having a poor loss ratio it wouldn’t surprise me. After all the company does underwrite the risk before agreeing to a contract. I can see where open brokerage on that basis makes sense.
The real problem as I see it is competition. While everyone might be all for the consumer getting a lower price on everything these days, such as airline tickets (look at that industry! Travel agents are something we should all be looking at closely.) it makes it very tough and in many cases impossible to operate in that environment.
Many will learn to live with less. Right now it is hard to find someone who will work for less than a decent percentage. Now we’ll all move to a fee basis? The problem is that when we all move to a fee basis we will be competing against a breed of discount brokers who will pop up the way $7 internet trading has in recent years.
I wonder where it will stop. I suspect that the bigger insureds will see value in this and pay a negotiated rate as many do now, but smaller companies who just need an accord app filled out won’t. It doesn’t matter how good your service is someone will offer him a rate lower, because they will automate the process and charge $20 or $50 (or less) per tranaction with no frills service. Do you think the client cares about your service? Some will, while most will love saving hundreds or thousands a year by eliminating your fees.
And Service Centers… They will offer to send insureds their renewal without commission on accounts that need little or no service. The company will just mail the bill and that’s it. Unless you actually do something with the account and justify it to the client(good luck!) why should you get paid anything on renewals. You only get renewals to keep you from shopping the client around anyhow. If we get paid at all it will be more like life insurance, which companies have been wanting us to do for years anyways.
Who do you think will open these discount brokers? Who else? Probably the companies, since they look at it as adding a pecentage to what they already make. An alternate distribution channel
Agents already are having a hard time and numbers of agencies have been falling. New agents have a terrible time getting started in business now. Why would anyone open a new agency under those conditions?
Those days are likely coming. They have been happening in every industry and seem to be starting to happen here. The reality is that except for the larger clients who need advice, most people will chose less advice and lower rates. If agencies could survive on negotiated fees alone, they wouldn’t pay us commissions. It’s a whole level of BS the companies can just eliminate.
Now I saw Delta airlines has been having hundreds of veteran pilots take early retirement. Much like what will happen in insurance I suspect. At that point I’ll be asking the same question I am asking about Delta….
If all the veterans are gone…Just who’s flying this plane?!?!
Wow this has really gotten away from the origional statement that I questioned and that was without a profitsharing agreement we would all start to write bad business. I guess the recyprocal of that is we only write good business because of the profitsharing. In otherwords 2% seperates the conscientous agent behavior from the indicated behavior without profitsharing. I have a feeling that fees will level the playing field especially customer paid fees. Maybe not. My origional comment was not to devide anyone just to say let’s don’t give up our commitment to our profession for 2%. Maybe I don’t talk so good. I know I don’t spell so good. I do use my real name and I do tell every customer what I make off his business.
The point of my last comment was not that there is inequity between small and large brokerages. Each has benefits and problems.
MY POINT is that carriers are blaming “brokers” for this contingency fiasco. Everyone is asking what can be done to contain the greedy brokers.
“Brokers” are not the problem.
Executives are the problem.
Brokers sell insurance. Brokers work for large and small brokerages. Brokers are the money makers.
Executives make the deals. Carriers “executives”, brokerage “executives”, agency “executives”… Stop trying to lay this crap at the feet of the brokers. AND, don’t even think about trying to punish us for what “executives” have done or use all this bad press to plead some tightning of commissions. As hard as we work to get an client insured properly, including client illiteracy, P.R. and customer relations, C.S.R’s, carrier underwriters and the simple fact of the sale, we deserve twice what we get now.
If the contingencies went to the brokers… but, they don’t, do they? The brokers earn the contingencies, the executives and stockholders collect. FAIR?
Don’t blame brokers.
There is an article in the international news FERMA Survey Finds Risk Managers Question Broker Compensation.
Brokers again…
Contingencies vs. straight commissions.
2%…
What is the value to our customers? An agent/broker is the light in the darkness for most even very small clients.
Most broker don’t know any more than their clients do, about the products that they sell. Most brokers aren’t working on anything larger than BOP accounts.
To a client/insured/customer, his broker has value. His broker is his mother, mostly. Life insurance, health insurance, auto insurance are all individual purchases and can be comfortably negotiated with a computer. But, small or large commercial insurance, workers compensation, commercial auto are not personal coverages. They involve lines of credit, workers, fleets etc. My insureds want to know that there is ONE PERSON that they can call any time, day or night.
I don’t charge fees. I don’t sell carriers who’s book is too small now or who are paying me contingencies.
I don’t write business to flaky customers. Why would anyone for any reason, write a risk that they know is going to be a loss leader.
INCENTIVE. …how about your appointment? Good business – keep your appointment. Bad business – lose your appointment.
Contingencies, who cares? Not any broker I know. Access to quality carriers, that I care about. Respectable commissions, that I care about.
Risk managers are questioning broker commissions? This is VERY bad. Carriers are pointing at brokers. This is VERY bad. The Federal Government is involved with making decisions about how much I should make. THIS IS VERY VERY BAD.
See teen girls losing their virginity in front of the cam teenage boys ****ing girls camp gallery, masturbating and playing real games with one another. They go crazy about sucking cocks everywhere teen titan toon sex sex and teen titans raven sex homepages every way possible. They don
Immagine that lower margins, higher premiums and complete transparancy for customers….what a novel idea! We have been telling our customers exactly what we make on their account for years. Its a lot of money and they will pay a lot of money to some agent or broker. We want them to know how much so they can measure our services against our competitors and see who earns those bucks.
Jim Howse
I think what will ultimately happen is that carriers will be forced to increase straightforward commission percentages and as the market softens more, then the carriers will start competing for more business by increasing these commission rates rather than reduce premiums. Does this benefit the Insured?
I feel that federal oversight of the insurance industry must be a balancing act between micro management and enforcement of laws. My own view is that federal oversight of our industry should concentrate primarily on insurance carrier and reinsurer solvency. We should request that our elected officials take a look at some of our overseas competitors as well.
Once the companies move away from Profit Sharing, they will remove all incentives for agents to write profitable business thus they should expect inordinate increases in losses.
When the agents lose their incentive to properly educate and help their insured’s cut exposures etc, claims will soar. Some companies may find this opportunity to increase their profitability by cutting incentive payments to their agents very attractive, it will blow up in their face.
Hopefully the more astute companies will realize that the Profit Sharing incentive really works to their advantage in that their underwritng results actually add to their bottom line.
This is no time for Company shortsighteness and greed to step into the heat of the battle over semantics and a general misunderstanding or lack of any understanding that is so pervasive with certain regulators as to how the insurance business has been transacted over many decades very successfully.
For a company to try to save around 2% of their premium by eliminating these incentives, they will be spending much more than that explaining to their shareholders why their losses are soaring beyond any acturial assumptions.
JAM
Remove all incentives for agents to write profitable business???? Agents loose their incentive to educate and help insured’s cut exposure???? 2% loss to agents. WOW!! What happened to professionalism and commitment to good business for everyone. You mean you will through out your commitment to both companies and customers for 2%. You give up pretty cheaply. We don’t have incentives; never have. I think the solution is for all coverages to be sold net and the agent/broker justifies their place at the table based on the value they bring and the fee they can negotiate. The bad get nothing; the good get more and the exceptional get the most.
Jim Howse
Mr. Howse, whoever you may be; if the greed of a few Brokers who defrauded their clients by taking fees from them and receiving undeiclosed Contingent Commission from a few companies for the placement of business upfront was not uncovered by AG Spitzer, our industry would not be going through this very unneccesary upheaval.
I am certainly pleased to know that you for one was not one of those Brokers. That certainly elevates my appreciation for the honest Broker and not the Shister Brokers who got caught with their hands in the cookie jar!
P. S. I am not sure I would want my companies or customers to know that I would go over to the dark side for 2%. It might make them wonder about some character issues better left unpublished on the Insurance Journal.
Jim Howse
I disagree with Jim’s comment about the tiered rewards for agents negotiatiions with their efficiency – all that will happen is that the same big brokers will use their muscle with carriers to sqeeze the best deal/cheapest price out of them to look the best to the client – should they be rewarded the most because it is perceived exceptional because they got the best terms on the back of a promisd huge premium base to the carrier?
Gentlemen, let’s get away from the veiled shots at each other. That’s exactly what they are hoping for. Divide and conquer.
You both have a point. I can see where the smaller agents might think that way, and guys who have no direct appointments might too. However the loss ratio isn’t going away unless some legislator figures out that it keeps agents from writing business. If they passed a law that said there will be no penalty for the agent having a poor loss ratio it wouldn’t surprise me. After all the company does underwrite the risk before agreeing to a contract. I can see where open brokerage on that basis makes sense.
The real problem as I see it is competition. While everyone might be all for the consumer getting a lower price on everything these days, such as airline tickets (look at that industry! Travel agents are something we should all be looking at closely.) it makes it very tough and in many cases impossible to operate in that environment.
Many will learn to live with less. Right now it is hard to find someone who will work for less than a decent percentage. Now we’ll all move to a fee basis? The problem is that when we all move to a fee basis we will be competing against a breed of discount brokers who will pop up the way $7 internet trading has in recent years.
I wonder where it will stop. I suspect that the bigger insureds will see value in this and pay a negotiated rate as many do now, but smaller companies who just need an accord app filled out won’t. It doesn’t matter how good your service is someone will offer him a rate lower, because they will automate the process and charge $20 or $50 (or less) per tranaction with no frills service. Do you think the client cares about your service? Some will, while most will love saving hundreds or thousands a year by eliminating your fees.
And Service Centers… They will offer to send insureds their renewal without commission on accounts that need little or no service. The company will just mail the bill and that’s it. Unless you actually do something with the account and justify it to the client(good luck!) why should you get paid anything on renewals. You only get renewals to keep you from shopping the client around anyhow. If we get paid at all it will be more like life insurance, which companies have been wanting us to do for years anyways.
Who do you think will open these discount brokers? Who else? Probably the companies, since they look at it as adding a pecentage to what they already make. An alternate distribution channel
Agents already are having a hard time and numbers of agencies have been falling. New agents have a terrible time getting started in business now. Why would anyone open a new agency under those conditions?
Those days are likely coming. They have been happening in every industry and seem to be starting to happen here. The reality is that except for the larger clients who need advice, most people will chose less advice and lower rates. If agencies could survive on negotiated fees alone, they wouldn’t pay us commissions. It’s a whole level of BS the companies can just eliminate.
Now I saw Delta airlines has been having hundreds of veteran pilots take early retirement. Much like what will happen in insurance I suspect. At that point I’ll be asking the same question I am asking about Delta….
If all the veterans are gone…Just who’s flying this plane?!?!
Wow this has really gotten away from the origional statement that I questioned and that was without a profitsharing agreement we would all start to write bad business. I guess the recyprocal of that is we only write good business because of the profitsharing. In otherwords 2% seperates the conscientous agent behavior from the indicated behavior without profitsharing. I have a feeling that fees will level the playing field especially customer paid fees. Maybe not. My origional comment was not to devide anyone just to say let’s don’t give up our commitment to our profession for 2%. Maybe I don’t talk so good. I know I don’t spell so good. I do use my real name and I do tell every customer what I make off his business.
Jim Howse
The point of my last comment was not that there is inequity between small and large brokerages. Each has benefits and problems.
MY POINT is that carriers are blaming “brokers” for this contingency fiasco. Everyone is asking what can be done to contain the greedy brokers.
“Brokers” are not the problem.
Executives are the problem.
Brokers sell insurance. Brokers work for large and small brokerages. Brokers are the money makers.
Executives make the deals. Carriers “executives”, brokerage “executives”, agency “executives”… Stop trying to lay this crap at the feet of the brokers. AND, don’t even think about trying to punish us for what “executives” have done or use all this bad press to plead some tightning of commissions. As hard as we work to get an client insured properly, including client illiteracy, P.R. and customer relations, C.S.R’s, carrier underwriters and the simple fact of the sale, we deserve twice what we get now.
If the contingencies went to the brokers… but, they don’t, do they? The brokers earn the contingencies, the executives and stockholders collect. FAIR?
Don’t blame brokers.
There is an article in the international news FERMA Survey Finds Risk Managers Question Broker Compensation.
Brokers again…
Contingencies vs. straight commissions.
2%…
What is the value to our customers? An agent/broker is the light in the darkness for most even very small clients.
Most broker don’t know any more than their clients do, about the products that they sell. Most brokers aren’t working on anything larger than BOP accounts.
To a client/insured/customer, his broker has value. His broker is his mother, mostly. Life insurance, health insurance, auto insurance are all individual purchases and can be comfortably negotiated with a computer. But, small or large commercial insurance, workers compensation, commercial auto are not personal coverages. They involve lines of credit, workers, fleets etc. My insureds want to know that there is ONE PERSON that they can call any time, day or night.
I don’t charge fees. I don’t sell carriers who’s book is too small now or who are paying me contingencies.
I don’t write business to flaky customers. Why would anyone for any reason, write a risk that they know is going to be a loss leader.
INCENTIVE. …how about your appointment? Good business – keep your appointment. Bad business – lose your appointment.
Contingencies, who cares? Not any broker I know. Access to quality carriers, that I care about. Respectable commissions, that I care about.
Risk managers are questioning broker commissions? This is VERY bad. Carriers are pointing at brokers. This is VERY bad. The Federal Government is involved with making decisions about how much I should make. THIS IS VERY VERY BAD.
Umm … were the brokers and underwriters who rigged bids executives?
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Jim did you know who a Felton Shaw was?