The leader of the nation’s biggest independent insurance agent association has promised agents his group will vigorously defend their incentive pay and contingent commissions that have come in for criticism by some attorneys general.
Citing the controversy of incentive pay paid to agents, Alex Soto, president of the Independent Insurance Agents and Brokers, pledged IIABA would continue to defend contingent commissions and incentive pay “whether in the court systems, state legislatures or in the halls of Congress and, importantly, in home offices of insurance companies that are partners of ours.”
Soto maintained that such profit-sharing is “proper, it is legal and it is used in every facet of commerce to reward excellence.”
Several major insurers, under pressure from attorneys general, have replaced traditional contingent commissions with new supplemental incentive plans.
Soto also said that if insurance companies insist upon disclosing to buyers what they pay their independent agents, they should also disclose other expenses. Noting that the average commission in his Miami agency, InSource, is 11 percent, he said he has no problem with “generic disclosure.” But, he added, if insurers require specific disclosure of agents’ pay, the public should also be informed about the remaining “89 percent in home office expenses,” including the cost of marketing and advertising, the cost of settling claims, and “what the CEO and top 10 officers make.”
At the same time, he offered that the emphasis on such disclosure is a “whole bunch of hooey,” suggesting insurance buyers do not judge agents by their compensation but by the products and services they provide.
Soto made his remarks during IIABA’s annual legislative conference and convention last week in Washington, D.C.
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