This battle might be getting interesting — and there\’s some fun in making it a federal issue.
First, profit commissions are a wonderful thing. So is Capitalism. Transparency is unnecessary, except to the point of disclosure of conflicts of interest. This industry needs a clear difference stated to the client when their insurance representative is working for them (a broker), or is working for the insurer (an agent). And what that means should be transparent. But how much income your broker or agent derives from doing business with you is none of your business, any more than it\’s your business to know the salary of the people that work there. That part of transparency is nonsense.
Profit commissions for agents is good business. It rewards good agents. It promotes better risk management. It lowers costs to customers that deserve it. It makes customers that cannot get placed into those markets by the agent pay a higher risk cost — which they should, and they are then motivated to improve their risk factor if it\’s worth their money to do so.
Captives and direct writers play on a different field. They have motivations similar to profit commissions — it\’s just not known that they do! These representatives simply need to disclose their allegiance is to their employer (they act like an agent) and provide the definition of a broker (while brokers must reveal the definition of an agent).
Certainly the case being made is absolutely correct — AGs were put into place to protect the law, not to WRITE it. There is no due process when \”the cop\” is standing over you making you agree to deals that the legislature hasn\’t created, and it\’s all done in a back room with a restricted audience.
So bring it to the light of the courts, where they should strike down any such deals, and it should then be referred to the legislators to deal with. Wonderful… and how our system is supposed to work.
But going to federal court is a gamble — no two ways around that one. What Congress should do is to make one ruling on this — because Insurance, like it or not, isn\’t a \”State trade\” and in order to get a level field, there\’s no place else to go. But different parts of the Insurance Industry then try to continue the State oversight of insurance. Come on now… make your decision and live with it. I\’d like to think that the federal route is the right one.
If the insurance industry loses their bid for Capitalism in the U. S. Congress, then it simply re-groups and tries again with a membership that becomes better informed — and it\’s the Insurance Industry\’s duty to provide that information. After all, it is the right thing to do, and that will come out in the end, even if it takes some time to make the members understand how this works. If the insurance industry believes they are right, then they continue to pursue this. If they lose, then everyone loses together, and the marketplace is on equal footing. That\’s more important to business in the end.
This is not too idealistic. It is where we should be focusing our energy, and becomes the final solution that works for everyone.
I can not believe how many typing errors are in this article!
This battle might be getting interesting — and there\’s some fun in making it a federal issue.
First, profit commissions are a wonderful thing. So is Capitalism. Transparency is unnecessary, except to the point of disclosure of conflicts of interest. This industry needs a clear difference stated to the client when their insurance representative is working for them (a broker), or is working for the insurer (an agent). And what that means should be transparent. But how much income your broker or agent derives from doing business with you is none of your business, any more than it\’s your business to know the salary of the people that work there. That part of transparency is nonsense.
Profit commissions for agents is good business. It rewards good agents. It promotes better risk management. It lowers costs to customers that deserve it. It makes customers that cannot get placed into those markets by the agent pay a higher risk cost — which they should, and they are then motivated to improve their risk factor if it\’s worth their money to do so.
Captives and direct writers play on a different field. They have motivations similar to profit commissions — it\’s just not known that they do! These representatives simply need to disclose their allegiance is to their employer (they act like an agent) and provide the definition of a broker (while brokers must reveal the definition of an agent).
Certainly the case being made is absolutely correct — AGs were put into place to protect the law, not to WRITE it. There is no due process when \”the cop\” is standing over you making you agree to deals that the legislature hasn\’t created, and it\’s all done in a back room with a restricted audience.
So bring it to the light of the courts, where they should strike down any such deals, and it should then be referred to the legislators to deal with. Wonderful… and how our system is supposed to work.
But going to federal court is a gamble — no two ways around that one. What Congress should do is to make one ruling on this — because Insurance, like it or not, isn\’t a \”State trade\” and in order to get a level field, there\’s no place else to go. But different parts of the Insurance Industry then try to continue the State oversight of insurance. Come on now… make your decision and live with it. I\’d like to think that the federal route is the right one.
If the insurance industry loses their bid for Capitalism in the U. S. Congress, then it simply re-groups and tries again with a membership that becomes better informed — and it\’s the Insurance Industry\’s duty to provide that information. After all, it is the right thing to do, and that will come out in the end, even if it takes some time to make the members understand how this works. If the insurance industry believes they are right, then they continue to pursue this. If they lose, then everyone loses together, and the marketplace is on equal footing. That\’s more important to business in the end.
This is not too idealistic. It is where we should be focusing our energy, and becomes the final solution that works for everyone.