The National Association of Professional Insurance Agents has reiterated its support of contingent commissions being a part of the compensation received by Main Street professional insurance agents.
The PIA statement was issued in response to an assertion made by Joseph Plumeri, CEO of Willis Group, who said at the annual conference of the Risk and Insurance Management Society (RIMS) that contingent commissions should be abolished throughout the insurance industry to include mega-brokerages as well as retail independent agents.
“This is a hypocritical suggestion, in that it comes from the CEO of the nation’s third-largest insurance broker – a firm that earlier this month agreed to pay $51 million in restitution to policyholders to resolve concerns about anticompetitive practices involving incentive fees in property and casualty insurance sales,” said Leonard Brevik, executive vice president and CEO of PIA National. “The timing of Mr. Plumeri’s comments makes them particularly dubious.” The settlement resulted from an investigation conducted by New York Attorney General Eliot Spitzer and Minnesota Attorney General Mike Hatch.
“This is another indication of people talking about the insurance industry in broad terms without having a complete understanding of all the issues involved,” Brevik said. “One mega-broker’s experience should not be extended to pontifications regarding the entire industry.”
Brevik noted that even New York’s Attorney General has clarified his position to distinguish between mega-brokers and Main Street agents.
“As he continued his investigations, the attorney general developed a more complete understanding and appreciation of the entire industry, of the differences between its sectors and the honesty of its participants,” Brevik said. “So much so that in January, Mr. Spitzer said he did not think contingent commissions should be banned industry wide. And, in February, he said the vast majority of agents and brokers are honest, and he cautioned against anyone generalizing or jumping to conclusions.”
In a speech to the National Press Club on Jan. 31, 2005, Spitzer said contingent commissions “may be appropriate…I don’t want to say they should be banned industry wide.” And in an interview broadcast on FOX News on February 15, 2005, Spitzer said, “…the vast majority of insurance brokers and agents are honest, hardworking, good individuals…the last thing anyone should do is generalize or jump to conclusions about an entire group of people who are in a sector that is vitally important. The importance of the insurance sector to our economy can’t be overstated.”
Brevik added he hopes Willis CEO Plumeri, like Eliot Spitzer, develops a better understanding of the various participants in the insurance industry.
Was this article valuable?
Here are more articles you may enjoy.