Mark. You’re right. The thing with Marsh, Aon, Willis, etc. is that they are brokers, not agents. Agents for insurers are just that, AGENTS. We know they represent certain carriers and it is expected that they will earn continent commissions. Brokers should earn whatever fee they agree to with their client and nothing more.
well said LAD. unfortunately the public doesn’t discern between agents and brokers, it’s all “insurance”, so we all take the black eye. brokers who did illegal acts need to suffer the consequences.
There are a lot of “little guy” divisions owned by big brokers which got hammered by Eliot Spitzer’s self-inflated ego. In our small personal lines unit within Aon, we got killed with this settlement and a lot of good, honest, lower-middle class employees lost their jobs while competitors laughed and prospered. Contingent commission are not just an issue of big commerical brokers, but includes all of their small subsidiaries as well. Everyone should have to play by the same rules.
Having previously worked for Aon, I can tell you that they’re losing much of their “middle market” business to regional brokers.
Why? Because they can’t provide any REAL service. They’ve outsourced much of their backoffice work to India (and to say that’s been a disaster is an understatement), and their clients simply don’t like the service, or lack there of, that they’re receiving.
Add into that they’re trying to increase the service fees they charge, claiming their cost of doing business has increased.
The small and mid-sized regional agencies do have an advantage over the big houses in that they can provide REAL service, including risk management, at a lower cost.
Being on the “client side” now, there are quite a number of our competators and associates that won’t do business with the big houses because of their high “service” fees and lack of personal contact.
That being said, I don’t feel at all sorry for Aon, Marsh, Willis, AJ Gallagher, or even Lockton.
Hey ! Say what you want about insurance brokers, but leave the Twins out of it !
Although, as I think about it, there is a parallel, as the Twins win or lose with integrity, as do “average” agents, unlike the Yankees or large brokers.
The reality of the matter: CFO’s and risk managers conciously purchase sub par programs because they don’t want to change broker/carrier. They knowingly overpay for a policy which does not provide adequate coverage. Why would the care about compensation?
This debate shouldn’t be centered on compensation and a “level” playing field. The focus should be on transparency and remembering whom you work for. Agents and brokers should work for their clients and not the insurance companies. If you can’t or won’t tell me exactly what you make off my business and that you wont take payments that are somehow tied to my business under the table or behind my back, then I am left to assume that you are no differant than those other large brokers that abused this form of compensation and sold their clients out, and will take my business to someone whom will act ethically when it comes to placing my business. It’s like the business person that goes to a strip club on a business trip, if you can’t tell your spouse about what happened, maybe you shouldn’t be there. It’s all about doing the right thing.
First, admissions: I was a small broker, but merged to a big one. I agree that punishment is needed for bad acts, but disagree that bad punishment can be accepted just because those receiving it did bad things.
Contingents had little to do with the steering and blocking that was the real problem. Contingents, therefore, should never have been involved in the punishment. The financial penalties simply should have been levied where they belonged, and the individuals held accountable for their specific actions.
It is simply contrary to our American ideals to revel in bad punishment. It allows you to become part of the problem — you sink into the mud you sling.
Contingents should be reinstated, even for the firms that suffered for their wrongdoing. Contingents don’t kill people, people kill people, to borrow from the gun lobby comparison (no, I don’t want a gun debate, please).
If you are really the “good guy” — then ACT like it. What injustice you allow for others, will be the same that others allow against you, and where our regulators will see is an acceptable action.
Take those people that did the truly bad things, and simply remove them from our industry — lifetime removals of their licenses, and not allow them to supervise anyone that has a license. With that, you’re done — no splash to contingents, no more worries about these humans doing it again, proof to our public that we’re actually serious about protecting the future, and a clear message that if you are in the business of trust, that you must earn it — and if you choose to give that trust away, you simply don’t belong here.
What SIZE your firm is makes no difference. Each segment has their advantages — neither is “better”… just DIFFERENT. And having been on both extremes, I assure you, they are “even enough” — which is why each can thrive if they merely work their respective advantages.
If there is “no crying in insurance,” then that means there is also no crying about one segment trying to defend themselves, or improve their firm’s bottom line.
To compare these publicly traded mega brokers with us independant agents is nothing like the NY Yankees compared with smaller market clubs. These mega brokers are literally many thousands of times larger than the average agency which serves residents and small business owners with personal hands-on service and integrity. Please don’t compare the Yankees with these mega brokers that cherry pick the large accounts in our communities and keep us independants out of the major leagues altogether.
I was an independant broker for many years and made my living off of the crumbs that fell of the big guys’ tables. I’m not saying that you can’t have them, just tell me what it is instead of making some vague reference to being able to earn them and then not tell me what you made, even if it isn’t determined until several months later. Transparency is easy and painless, give it a try.
Hoping that whomever at IJ posts each article actually then reads the comments posted thereon, I send this request to IJ for future use of this feedback forum.
Rather than merely post every comment, could you filter these things first, to at least ensure that the response mainly deals with the actual article, please?
I enjoy the articles, and then the debates regarding it. But hearing nonsense about off-subject items is becoming a waste of my time, and turns some of us off so much that we’re no longer interested in your forum here, because it’s not about insurance any more.
If you’re not willing or cannot afford the investment in a filtering process, then could you, as part of your comment request section, please post some kind of warning or request to STAY ON THE SUBJECT AT HAND.
Another potential to save IJ time would be to allow readers to flag nonsense. Too many flags, and an IJ staffer would review, and decide if the item should be removed. Also post next to each comment how many flags users had already tagged to it — as I for one would enjoy skipping the comments that have 6 “nonsense” flags already attached to it. This may be a good balanced process to allow immeidiate posting, reduced IJ staffer support time, but allow readers that really want to remain on the subject to better select what time they invested in reading.
I realize you don’t want to “control” the open forum, but before simply giving up and discontinuing reading your stuff, I’m hopeful a suggestion like this one might give you an alternative idea that might work.
I do appreciate your articles — and the debate is great… but just don’t have the time to invest if it continues this way.
Technically Agents and Brokers serve two different masters by contract and by statute.
An agent is CONTRACTULLY and STATUTORIALLY required to do what is best for the insurance carrier; regardless of where their heart lies. Every good agent wants to the the best they can for the insured, but they are contractually tied to the carrier.
A broker works solely for the client – which means they have no contract with the insurance carrier. No contract kills off contingent commissions as a possibility. Brokers have to work through MGA’s or MGU’s to get to the carriers.
These terms are often used interchangeably (especially by the big boys). But once you look at the contract, if one exists, you know for whom they work.
Let me ask you this-when you buy a car do you know how much the dealer makes much less than the individual salesman? probably not. On the other hand, if you engage the services of an attorney you know what you are paying for them.
The difference between the 2 is that one is a one time sale and the other is supposed to represent a relationship and usually the smart consumer price shops the car sale but tends to buy the attorney based upon reputation for quality of service provided not price per hour.
Agents and brokers have tried to work off the latter concept of a professional relationship but all too often the insurance buyer-and as I might add many risk managers buy only on price-its a tangible which is easily measured and rewarded by their superiors.
That being the case, why is it any of your business how much I make off your sale any more than any other competitive bidding arrangement?
Do your clients know exactly what you make on every sale/service? We are held to a level of professionalism duplicated only in professions typically using a “billable hours” scenario yet compensated like a “piece worker”. Frankly, don’t you think your ability to shop your insurance mitigates any additional compensation a broker is able to eek out based on the profitability of his entire book of business? And how, exactly, would you have your broker account for your portion of any contingency when profitability is part of the benchmark for that commission? If you have claims, chances are you prohibited the broker from receiving a profit-sharing contingency. You really want to have THAT conversation? When your customers start getting to decide how much you should be making, then I think it might be appropriate for you to know how much your insurance broker is making.
You miss the point of an internet forum-it is supposed to be unregulated and a little bit chaotic. Furthermore, I doubt IJ has the time to screen posts or could find/develop software that would filter out “irrelevant” comments. The reality of the internet is that it’s the responsibility of each user (and not some Big Brother) to do their own work in evaluating, screening, choosing, etc.
I’m sorry that the big guys at Aon didn’t consider the “little people” when they made their corporate decisions. I guess they sacrificed those lower middle class individuals to avoid criminal prosecution. You can’t expect the industry to pay for the misdeeds of a small number of corrupt organizations. Why should the rest of us be judged by the lowest common denominator? What rules was Aon “playing by” when they got themselves into this mess?
Twins rule – yankees drule. Your just unhappy that the one of the highest paid baseball teams has been losing to the Twins. In fact todays game is Twins 3- Yanks zerooooo. By the way you spelled Kirby’s name incorrectly… unless you posted with your real name. Mr. Suckett
IJ, please do not filter the comments. The more off subject the comments, the better. Baseball means nothing to me, but usually I enjoy the comments. In fact, where’s the global warming articles. I really miss the comments on those articles. Too politicial?
Thanks for the honesty and transparency, it is greatly appreciated and hopefully, it is appreciated by your clients. As far as a couple of other comments in response to my post, I am not a BOP account so, I can’t easily “shop” my insurance amongst multiple agents/brokers, like when I buy a car, I have to pick one agent or broker and ride with them. When purchasing a car, a BOP or small business policy or some form of commodity, I don’t really care what commission the salesman makes, because in the end, you have many dealers competing for my business and can easily judge the product by it’s attributes and ultimate price/value proposition. not so in complex insurance transactions so, the analogy doesn’t work.
Sorry, but I have a problem with that. What you are suggesting is like going to the grocery store as a consumer (yes – our insured’s are the consumer of a product we are the middle men selling), taking my receipt up to the desk and asking them ho much money they just made of each product I bought from them that trip. Sound rediculous – I sure think it is.
If a consumer thinks we agents do what we do for free, market their accounts, service them, etc. for free, then they need to go back to 1st grade. if we didn’t make money on what we were doing how could we even be in business.
We as agents need to have the best interest of our insured’s in mind with regards to coverage, pricing, etc. In return from that we get commission & sometimes contingent $$ depeding on our book with a cetain company. The contingent $$ does not hurt our client as long as we Agents are honest in our actions.
Whay assume everyone is crooked like Marsh, Willis, etc. I say everyone is innocent until proven guilty!
I think the “Big Guys” got what they deserved for the dishonest acts they committed. Don’t put that on me or my agency. We didn’t do it and shouldn’t have to pay for it.
When ALL other sales and service entities decide that it is best to disclose their earnings up front, then we should also consider it.
As for contingent commission (the subject of the article not some babbling about self worth) is paid up front to the Broker that is steering and that is what the big guys did and they got what they had coming to them!
When Independent Insurance Agencies receive performance bonuses (contingent commissions) it is at the end of the cycle and does not in any way constitute steering.
At times we seem to forget that the customer decides who will write their insurance and not the agent. Any agent that writes business purely on a commission basis will not be in business very long! This whole debate is devoid of common sense. the last I knew MOST people shop for their insurance and they have plenty of places to choose from. My bet is that the highest rate is never their choice.
I can not stand by any longer without joining the fray. I am sick and tired of hearing the “little” guys whine about Marsh, AON, Willis and so on. Hey you chose or it was chosen for you to work where you work. So shut up and live with it. Face it big clients need the resources of big brokers!!! Ask Sarbanes/Oxley.
On another note, few if any of the allegations alleged to have occurred at the poor “big brokers” have stuck. Many were ruled against or thrown out AND no prison time has been handed out.
Last but not least, shame on RIMS and it’s members for not being forthright on the contingent commission issue. ANY experienced insurance person knew or should have known of their existence. Not one rasied their hand, at lease publicly, but all had their hands out when settlements were to be made.
While you think it is obvious that we are paid commission.
You apparently don’t sell your group health clients Medicare Advantage Plans – as they age into / out of group coverage – where you are required by law to disclose that you work for commission and tell them the amount if they ask.
How hard is it to tell your homeowners insurance purchaser that their premium is $680 and you made a gross commission of $81.60.
Or a $20,000 business account that you made $3,000 Gross if you arent the owner tell them how much of that you make.
Wonder if there could be a reversal of fortune amiss? Perhaps large brokers will begin to unravel and everyone will go back to the smaller independents?
You are off point and irrelevant. We are sick of YOU! Get lost! Stop getting the IJ already. Your posts are always a pile of crap, like your work, I’m sure.
I live by the rule of Thomas Jefferson, “Whenever I do anything, I act as if the world is watching”…very powerful when you think about the state of the industry.
I worked for Aon when this whole thing went down, and now I work for Marsh, and I have to tell you that no one thinks they did anything wrong…it’s funny and sad. There is way to much finger pointing…but Chicago RM has hit it on the head, it all matters how YOU serviced YOUR client. I am not based in Chicago or NY, and these agreements were made out of Chicago and NY, the local people on the ground are lumped in with the, as some of you called us, “sleeeeze bags”. No wonder we are thought of as one small step a head of used car salesmen.
So just because you have to select one agent/broker, why do they then have to tell you what kind of commissions they are making off of your business? If you don’t trust the broker to charge a fair or industry standard amount of commission…why are you doing business with them in the first place? Personally I wouldn’t have a problem revealing my commission amount to a really large account. It’s part of the whole reciprocal trust in the relationship. However, I don’t see how it makes sense to force an agent/broker to reveal that. You can always find a broker that would be willing to take over an account for a little less money, but how far are you willing to go? What if they offer to do it for free just to get in the door? Would you really want your agent to be working for you for free?
Hey Nick! RM just wanted us all to know that HE’S a BIG boy. How original! And he believes that the rest of us are marketing BOP’s all day long. Too bad you can’t shop. Why is that the entire insurance industry’s problem?
So it’s ok for the big guys to STEAL from their clients by rigging their “competitive” bids?
And then it’s ok for them to escape serious punishment because those of us who wouldn’t ever even consider STEALING from our clients, who, after all, TRUST us, aren’t penalized too?
Does your sarcasm indicate that I might have hit a bit close to home?
I have worked on a few National Account type risks to go along with my BOP-and mid market clients-I do work to service them all, but that was how I was trained.
Now in terms of buying behavior most of my smaller or mid market clients won’t shop me after the 1st year or 2nd year. And I do feel pretty good about that. I still will visit with them every year and if they want, go over the policies in full and if not, then any changes over the expiring term. I never did get in the habit of mailing the policy with an invoice.
Suprisingly it tends to be the larger clients who shop me at least every 3 years and often annually. Coverage and relationships tends to take a back seat to price-they love the 1st 2 as long as I’ve got the best bid but otherwise all they care about is if I’ve brought the price down over last year as the CFO or controller gets calls from Marsh, AON ro Willis, etc who tells them sight unseen that they can do far better then an agent from a regional shop.
Sorry man but in all honesty the risk managers in the business should be called price managers as that is all they are rewarded on and thus care about. They don’t push back against their bosses in telling their tale about how good risk management is worth far more than an insurance premium.
Let’s lay the cards on the table, the big guys used their clout with the major markets to rig the supposedly competitive bids they were getting so they could STEAL from their clients.
They got caught and to avoid criminal prosecution reached plea bargain deals whereby they gave up contingent commissions.
Now they are back crying in their spilt milk that it’s unfair for them not be able to accept contingent commissions.
Well, hey guys, it’s unfair to steal from your clients too!
Tough cookies I say, you made your bed, now lay in it.
The market today is completely built for mega brokers, large volume comitments, commision levels that only the large and jumbo size agencies can ever reach. The real issue is the large brokers want to kill guys like me, Im a part owner of a 3 million dollar agency. Is Marsh and company seriously trying to say that I have an edge over them? Not to menchin this whole thing about contengent commisions is THEIR FAULT!!!!! You abused it, you did unethical things and NOW you dont want to suffer the consiquenses. If it wasnt for these 3 brokers we wouldnt even have to talk about this. You screwed up, now accept your punishment and stop trying to pass the buck on to guys like me. I did the right thing for my clients so why should i suffer with you sleeeeeeeze balls.
I tell all the hot heads and yellers and the people who want to “hang out to looong” in my office, just how much I make off them so that they will get off my back and it works! My securities license opens it all up for the client as well. I have nothing to hide. I’m not making the big bucks, but Im doing alright. The big dogs shouldnt be able to make money unless they deserve it.
If they are partaking in the risk, then the money should be theirs, if its just a shell game with the cash ending in their pockets then ya that is theft. I deserve every penny I make. Either way it ends up whether we have to disclose or not – it wont kill us honest and hardworking people.
The article states it is “laughable when a mega broker… says the insurance brokerage playing field is not level; if it… now operates at a competitive disadvantage, it is solely due to its own misdeeds” BUT DIDN’T THE MEGA BROKERS ALREADY PAY FINES FOR IT? Sounds to me like to writer is whining.
Geez, amazing posts that cover all the tens of thousands of sleezy horrible mega broker employees with one big paint brush. only one firm was unethical, and within that firm, only one unit. it was egregious, but not all Marsh ee’s are sleezeballs…. the carrier home office leaders are laughing because we are fighting amongst ourselves, when the best answer is for them to do a better job, and use technology better, so that we can work for the meager commissions they pay us to fix their crappy work. They divide and conquer. Contingents are bs. Pay us the right percentage or do a better job so we don’t have to drown in late incorrect policies, hard copy loss runs, incorrect billings, and 5000 specialty applications that the clients don’t value. And quit trying to hold ground on renewals while trying to steal the new business through competing agencies by dropping your pants.
It wasn’t just one broker, and it wasn’t just the three named in the article.
It wasn’t just “one unit”, it was corporate strategy for all large accounts.
Yes, they paid fines, but giving up contingents was part of their plea deal with Spitzer of NY and others to avoid criminal prosecution (although some got prosecuted anyway) – I guess Spitzer wanted to nail those most responsible.
Unfortunately, all who work for the megas suffer when only a small number of their fellows were actually involved in the stealing from their clients, but that’s the employer spreading the cost around, far beyond those who were guilty, that’s not the legal system singling them out.
I SAT THRU THE HEARINGS HERE IN NEW YORK CITY, AND IT WAS SAID AT NUMEROUS TIMES THROUGHOUT THE DAY “NO DECISION HAS BEEN MADE” IT IS CLEAR THAT A DECISION HAS BEEN MADE, AS SOMEONE FAMOUS SAID “ME THINKS THOU PROTEST TOO MUCH”….
IT SEEMS THAT THE PANEL MEMBERS FORGOT THAT THE INSURANCE DEPARTMENT APPROVES RATE FILINGS AND BROKERS SELL THE PRODUCTS APPROVED FOR SALE IN THE STATE. THEY BELIEVE THAT BROKERS AND AGENTS MAKE UP THEIR OWN RATES AND PRICES. THEY ARE ALSO UNDER THE IMPRESSION THAT I COULD FORCE A CARRIER TO STAY ON A RISK, REGARDLESS OF ITS UNDERWRITING MERIT. SOME OF THESE INCORRECT ASSUMTIONS MAY BE ATTIBUTERD TO THE FACT THAT THE PANEL MEMBERS HAVE FOUND ALL THIS TO BE TRUE IN “MEGABROKER LAND” ON NUMEROUS OCCASIONS THEY REFEREANCED AN INVESTIGATION THAT HAS UNCOVERED ALL OF THIS,THIS REPORT WAS NEVER IDENTIFIED OR PRESENTED FOR OUTSIDE REVIEW OR COMMENT, YET A HEARING WAS CALLED AND TESTIMONY REQUESTED.
SOMEHOW THIS INVESTIGATION INTO ILLEGAL ACTIVITY TURNED INTO A PARADE OF MEGA BROKERS CLAIMING THEY CAN NO LONGER COMPETE.THE LAUGH OF IT IS THAT THE MEGA’S WHO CALL FOR AN EVEN PLAYING FIELD HAVE BEEN EATING MY LUNCH FOR YEARS. WHAT THEY CLAIM TO BE THE “UNFAIR ADVANTAGE” IS EXACTLY THAT WHICH HAS ALLOWED THEM TO FLOURISH.
MOSTLY THEY HAVE NOT HAD TO COMPETE WITH THE LIKES OF ME BECAUSE THEY WERE ABLE TO NEGOTIATE BETTER DEALS WITH THEIR COMPANY PARTNERS,AND DIDCTATE UNDERWRITING GUIDLINES.
AS WE GO FOWARD IT IS CLEAR THAT WE WILL BE DEALING IN A “NET OF COMMISION WORLD”. WILL THIS MAKE IT IMPOSSIBLE FOR CARRIERS TO NEGOTIATE BETTER DEALS WITH BIGGER BROKERS?
Mark. You’re right. The thing with Marsh, Aon, Willis, etc. is that they are brokers, not agents. Agents for insurers are just that, AGENTS. We know they represent certain carriers and it is expected that they will earn continent commissions. Brokers should earn whatever fee they agree to with their client and nothing more.
well said LAD. unfortunately the public doesn’t discern between agents and brokers, it’s all “insurance”, so we all take the black eye. brokers who did illegal acts need to suffer the consequences.
There are a lot of “little guy” divisions owned by big brokers which got hammered by Eliot Spitzer’s self-inflated ego. In our small personal lines unit within Aon, we got killed with this settlement and a lot of good, honest, lower-middle class employees lost their jobs while competitors laughed and prospered. Contingent commission are not just an issue of big commerical brokers, but includes all of their small subsidiaries as well. Everyone should have to play by the same rules.
Having previously worked for Aon, I can tell you that they’re losing much of their “middle market” business to regional brokers.
Why? Because they can’t provide any REAL service. They’ve outsourced much of their backoffice work to India (and to say that’s been a disaster is an understatement), and their clients simply don’t like the service, or lack there of, that they’re receiving.
Add into that they’re trying to increase the service fees they charge, claiming their cost of doing business has increased.
The small and mid-sized regional agencies do have an advantage over the big houses in that they can provide REAL service, including risk management, at a lower cost.
Being on the “client side” now, there are quite a number of our competators and associates that won’t do business with the big houses because of their high “service” fees and lack of personal contact.
That being said, I don’t feel at all sorry for Aon, Marsh, Willis, AJ Gallagher, or even Lockton.
Hey ! Say what you want about insurance brokers, but leave the Twins out of it !
Although, as I think about it, there is a parallel, as the Twins win or lose with integrity, as do “average” agents, unlike the Yankees or large brokers.
Screw the Twins! They cheated in 1987 and 1991. That Fat Azz Kirby Suckett was the biggest thief that lived!
The reality of the matter: CFO’s and risk managers conciously purchase sub par programs because they don’t want to change broker/carrier. They knowingly overpay for a policy which does not provide adequate coverage. Why would the care about compensation?
This debate shouldn’t be centered on compensation and a “level” playing field. The focus should be on transparency and remembering whom you work for. Agents and brokers should work for their clients and not the insurance companies. If you can’t or won’t tell me exactly what you make off my business and that you wont take payments that are somehow tied to my business under the table or behind my back, then I am left to assume that you are no differant than those other large brokers that abused this form of compensation and sold their clients out, and will take my business to someone whom will act ethically when it comes to placing my business. It’s like the business person that goes to a strip club on a business trip, if you can’t tell your spouse about what happened, maybe you shouldn’t be there. It’s all about doing the right thing.
First, admissions: I was a small broker, but merged to a big one. I agree that punishment is needed for bad acts, but disagree that bad punishment can be accepted just because those receiving it did bad things.
Contingents had little to do with the steering and blocking that was the real problem. Contingents, therefore, should never have been involved in the punishment. The financial penalties simply should have been levied where they belonged, and the individuals held accountable for their specific actions.
It is simply contrary to our American ideals to revel in bad punishment. It allows you to become part of the problem — you sink into the mud you sling.
Contingents should be reinstated, even for the firms that suffered for their wrongdoing. Contingents don’t kill people, people kill people, to borrow from the gun lobby comparison (no, I don’t want a gun debate, please).
If you are really the “good guy” — then ACT like it. What injustice you allow for others, will be the same that others allow against you, and where our regulators will see is an acceptable action.
Take those people that did the truly bad things, and simply remove them from our industry — lifetime removals of their licenses, and not allow them to supervise anyone that has a license. With that, you’re done — no splash to contingents, no more worries about these humans doing it again, proof to our public that we’re actually serious about protecting the future, and a clear message that if you are in the business of trust, that you must earn it — and if you choose to give that trust away, you simply don’t belong here.
What SIZE your firm is makes no difference. Each segment has their advantages — neither is “better”… just DIFFERENT. And having been on both extremes, I assure you, they are “even enough” — which is why each can thrive if they merely work their respective advantages.
If there is “no crying in insurance,” then that means there is also no crying about one segment trying to defend themselves, or improve their firm’s bottom line.
To compare these publicly traded mega brokers with us independant agents is nothing like the NY Yankees compared with smaller market clubs. These mega brokers are literally many thousands of times larger than the average agency which serves residents and small business owners with personal hands-on service and integrity. Please don’t compare the Yankees with these mega brokers that cherry pick the large accounts in our communities and keep us independants out of the major leagues altogether.
Why did the conversation switch from baseball to insurance?
Yankees Rule!
I was an independant broker for many years and made my living off of the crumbs that fell of the big guys’ tables. I’m not saying that you can’t have them, just tell me what it is instead of making some vague reference to being able to earn them and then not tell me what you made, even if it isn’t determined until several months later. Transparency is easy and painless, give it a try.
Hoping that whomever at IJ posts each article actually then reads the comments posted thereon, I send this request to IJ for future use of this feedback forum.
Rather than merely post every comment, could you filter these things first, to at least ensure that the response mainly deals with the actual article, please?
I enjoy the articles, and then the debates regarding it. But hearing nonsense about off-subject items is becoming a waste of my time, and turns some of us off so much that we’re no longer interested in your forum here, because it’s not about insurance any more.
If you’re not willing or cannot afford the investment in a filtering process, then could you, as part of your comment request section, please post some kind of warning or request to STAY ON THE SUBJECT AT HAND.
Another potential to save IJ time would be to allow readers to flag nonsense. Too many flags, and an IJ staffer would review, and decide if the item should be removed. Also post next to each comment how many flags users had already tagged to it — as I for one would enjoy skipping the comments that have 6 “nonsense” flags already attached to it. This may be a good balanced process to allow immeidiate posting, reduced IJ staffer support time, but allow readers that really want to remain on the subject to better select what time they invested in reading.
I realize you don’t want to “control” the open forum, but before simply giving up and discontinuing reading your stuff, I’m hopeful a suggestion like this one might give you an alternative idea that might work.
I do appreciate your articles — and the debate is great… but just don’t have the time to invest if it continues this way.
Technically Agents and Brokers serve two different masters by contract and by statute.
An agent is CONTRACTULLY and STATUTORIALLY required to do what is best for the insurance carrier; regardless of where their heart lies. Every good agent wants to the the best they can for the insured, but they are contractually tied to the carrier.
A broker works solely for the client – which means they have no contract with the insurance carrier. No contract kills off contingent commissions as a possibility. Brokers have to work through MGA’s or MGU’s to get to the carriers.
These terms are often used interchangeably (especially by the big boys). But once you look at the contract, if one exists, you know for whom they work.
Hey Mr. Pot leave Mr. Kettle alone.
Let me ask you this-when you buy a car do you know how much the dealer makes much less than the individual salesman? probably not. On the other hand, if you engage the services of an attorney you know what you are paying for them.
The difference between the 2 is that one is a one time sale and the other is supposed to represent a relationship and usually the smart consumer price shops the car sale but tends to buy the attorney based upon reputation for quality of service provided not price per hour.
Agents and brokers have tried to work off the latter concept of a professional relationship but all too often the insurance buyer-and as I might add many risk managers buy only on price-its a tangible which is easily measured and rewarded by their superiors.
That being the case, why is it any of your business how much I make off your sale any more than any other competitive bidding arrangement?
Do your clients know exactly what you make on every sale/service? We are held to a level of professionalism duplicated only in professions typically using a “billable hours” scenario yet compensated like a “piece worker”. Frankly, don’t you think your ability to shop your insurance mitigates any additional compensation a broker is able to eek out based on the profitability of his entire book of business? And how, exactly, would you have your broker account for your portion of any contingency when profitability is part of the benchmark for that commission? If you have claims, chances are you prohibited the broker from receiving a profit-sharing contingency. You really want to have THAT conversation? When your customers start getting to decide how much you should be making, then I think it might be appropriate for you to know how much your insurance broker is making.
Frustrated,
You miss the point of an internet forum-it is supposed to be unregulated and a little bit chaotic. Furthermore, I doubt IJ has the time to screen posts or could find/develop software that would filter out “irrelevant” comments. The reality of the internet is that it’s the responsibility of each user (and not some Big Brother) to do their own work in evaluating, screening, choosing, etc.
I’m sorry that the big guys at Aon didn’t consider the “little people” when they made their corporate decisions. I guess they sacrificed those lower middle class individuals to avoid criminal prosecution. You can’t expect the industry to pay for the misdeeds of a small number of corrupt organizations. Why should the rest of us be judged by the lowest common denominator? What rules was Aon “playing by” when they got themselves into this mess?
Twins rule – yankees drule. Your just unhappy that the one of the highest paid baseball teams has been losing to the Twins. In fact todays game is Twins 3- Yanks zerooooo. By the way you spelled Kirby’s name incorrectly… unless you posted with your real name. Mr. Suckett
Anyone who is too frightened to disclose their compensation does not belong in this business.
I am worth every penny I make. We disclose at our front counter what our commission percentages are and list the same disclosure on our website.
I use to have a securities license and had to disclose it then.
Dont look at this as a negative. Some would be suprised to find how little we make on our small accounts!
IJ, please do not filter the comments. The more off subject the comments, the better. Baseball means nothing to me, but usually I enjoy the comments. In fact, where’s the global warming articles. I really miss the comments on those articles. Too politicial?
Thanks for the honesty and transparency, it is greatly appreciated and hopefully, it is appreciated by your clients. As far as a couple of other comments in response to my post, I am not a BOP account so, I can’t easily “shop” my insurance amongst multiple agents/brokers, like when I buy a car, I have to pick one agent or broker and ride with them. When purchasing a car, a BOP or small business policy or some form of commodity, I don’t really care what commission the salesman makes, because in the end, you have many dealers competing for my business and can easily judge the product by it’s attributes and ultimate price/value proposition. not so in complex insurance transactions so, the analogy doesn’t work.
Sorry, but I have a problem with that. What you are suggesting is like going to the grocery store as a consumer (yes – our insured’s are the consumer of a product we are the middle men selling), taking my receipt up to the desk and asking them ho much money they just made of each product I bought from them that trip. Sound rediculous – I sure think it is.
If a consumer thinks we agents do what we do for free, market their accounts, service them, etc. for free, then they need to go back to 1st grade. if we didn’t make money on what we were doing how could we even be in business.
We as agents need to have the best interest of our insured’s in mind with regards to coverage, pricing, etc. In return from that we get commission & sometimes contingent $$ depeding on our book with a cetain company. The contingent $$ does not hurt our client as long as we Agents are honest in our actions.
Whay assume everyone is crooked like Marsh, Willis, etc. I say everyone is innocent until proven guilty!
I think the “Big Guys” got what they deserved for the dishonest acts they committed. Don’t put that on me or my agency. We didn’t do it and shouldn’t have to pay for it.
When ALL other sales and service entities decide that it is best to disclose their earnings up front, then we should also consider it.
As for contingent commission (the subject of the article not some babbling about self worth) is paid up front to the Broker that is steering and that is what the big guys did and they got what they had coming to them!
When Independent Insurance Agencies receive performance bonuses (contingent commissions) it is at the end of the cycle and does not in any way constitute steering.
At times we seem to forget that the customer decides who will write their insurance and not the agent. Any agent that writes business purely on a commission basis will not be in business very long! This whole debate is devoid of common sense. the last I knew MOST people shop for their insurance and they have plenty of places to choose from. My bet is that the highest rate is never their choice.
Sorry about the spelling in my original post. I was a bit heated when writing it. Go Yankees!!!
I can not stand by any longer without joining the fray. I am sick and tired of hearing the “little” guys whine about Marsh, AON, Willis and so on. Hey you chose or it was chosen for you to work where you work. So shut up and live with it. Face it big clients need the resources of big brokers!!! Ask Sarbanes/Oxley.
On another note, few if any of the allegations alleged to have occurred at the poor “big brokers” have stuck. Many were ruled against or thrown out AND no prison time has been handed out.
Last but not least, shame on RIMS and it’s members for not being forthright on the contingent commission issue. ANY experienced insurance person knew or should have known of their existence. Not one rasied their hand, at lease publicly, but all had their hands out when settlements were to be made.
While you think it is obvious that we are paid commission.
You apparently don’t sell your group health clients Medicare Advantage Plans – as they age into / out of group coverage – where you are required by law to disclose that you work for commission and tell them the amount if they ask.
How hard is it to tell your homeowners insurance purchaser that their premium is $680 and you made a gross commission of $81.60.
Or a $20,000 business account that you made $3,000 Gross if you arent the owner tell them how much of that you make.
Not everyone will ask or care.
Wonder if there could be a reversal of fortune amiss? Perhaps large brokers will begin to unravel and everyone will go back to the smaller independents?
I am sure that their deep pockets are still more than full with all the money they made. Why go after us little guys who are honest.
If a small broker did what they did, their business would have closed. The greedy still want more.
Izzy,
You are off point and irrelevant. We are sick of YOU! Get lost! Stop getting the IJ already. Your posts are always a pile of crap, like your work, I’m sure.
I live by the rule of Thomas Jefferson, “Whenever I do anything, I act as if the world is watching”…very powerful when you think about the state of the industry.
I worked for Aon when this whole thing went down, and now I work for Marsh, and I have to tell you that no one thinks they did anything wrong…it’s funny and sad. There is way to much finger pointing…but Chicago RM has hit it on the head, it all matters how YOU serviced YOUR client. I am not based in Chicago or NY, and these agreements were made out of Chicago and NY, the local people on the ground are lumped in with the, as some of you called us, “sleeeeze bags”. No wonder we are thought of as one small step a head of used car salesmen.
So just because you have to select one agent/broker, why do they then have to tell you what kind of commissions they are making off of your business? If you don’t trust the broker to charge a fair or industry standard amount of commission…why are you doing business with them in the first place? Personally I wouldn’t have a problem revealing my commission amount to a really large account. It’s part of the whole reciprocal trust in the relationship. However, I don’t see how it makes sense to force an agent/broker to reveal that. You can always find a broker that would be willing to take over an account for a little less money, but how far are you willing to go? What if they offer to do it for free just to get in the door? Would you really want your agent to be working for you for free?
Hey Nick! RM just wanted us all to know that HE’S a BIG boy. How original! And he believes that the rest of us are marketing BOP’s all day long. Too bad you can’t shop. Why is that the entire insurance industry’s problem?
So it’s ok for the big guys to STEAL from their clients by rigging their “competitive” bids?
And then it’s ok for them to escape serious punishment because those of us who wouldn’t ever even consider STEALING from our clients, who, after all, TRUST us, aren’t penalized too?
Does your sarcasm indicate that I might have hit a bit close to home?
I have worked on a few National Account type risks to go along with my BOP-and mid market clients-I do work to service them all, but that was how I was trained.
Now in terms of buying behavior most of my smaller or mid market clients won’t shop me after the 1st year or 2nd year. And I do feel pretty good about that. I still will visit with them every year and if they want, go over the policies in full and if not, then any changes over the expiring term. I never did get in the habit of mailing the policy with an invoice.
Suprisingly it tends to be the larger clients who shop me at least every 3 years and often annually. Coverage and relationships tends to take a back seat to price-they love the 1st 2 as long as I’ve got the best bid but otherwise all they care about is if I’ve brought the price down over last year as the CFO or controller gets calls from Marsh, AON ro Willis, etc who tells them sight unseen that they can do far better then an agent from a regional shop.
Sorry man but in all honesty the risk managers in the business should be called price managers as that is all they are rewarded on and thus care about. They don’t push back against their bosses in telling their tale about how good risk management is worth far more than an insurance premium.
Let’s lay the cards on the table, the big guys used their clout with the major markets to rig the supposedly competitive bids they were getting so they could STEAL from their clients.
They got caught and to avoid criminal prosecution reached plea bargain deals whereby they gave up contingent commissions.
Now they are back crying in their spilt milk that it’s unfair for them not be able to accept contingent commissions.
Well, hey guys, it’s unfair to steal from your clients too!
Tough cookies I say, you made your bed, now lay in it.
…. and don’t ask honest practitioners to sleep with you.
The market today is completely built for mega brokers, large volume comitments, commision levels that only the large and jumbo size agencies can ever reach. The real issue is the large brokers want to kill guys like me, Im a part owner of a 3 million dollar agency. Is Marsh and company seriously trying to say that I have an edge over them? Not to menchin this whole thing about contengent commisions is THEIR FAULT!!!!! You abused it, you did unethical things and NOW you dont want to suffer the consiquenses. If it wasnt for these 3 brokers we wouldnt even have to talk about this. You screwed up, now accept your punishment and stop trying to pass the buck on to guys like me. I did the right thing for my clients so why should i suffer with you sleeeeeeeze balls.
so there
All of you need spell check. Whether your ideas are right or wrong, you need to communicate as a professional. Yikes!
AJ–Did you have to attend an institution of higher learning to acquire your judgemental nature or is that genetic? Professional enough for you?
I tell all the hot heads and yellers and the people who want to “hang out to looong” in my office, just how much I make off them so that they will get off my back and it works! My securities license opens it all up for the client as well. I have nothing to hide. I’m not making the big bucks, but Im doing alright. The big dogs shouldnt be able to make money unless they deserve it.
If they are partaking in the risk, then the money should be theirs, if its just a shell game with the cash ending in their pockets then ya that is theft. I deserve every penny I make. Either way it ends up whether we have to disclose or not – it wont kill us honest and hardworking people.
The article states it is “laughable when a mega broker… says the insurance brokerage playing field is not level; if it… now operates at a competitive disadvantage, it is solely due to its own misdeeds” BUT DIDN’T THE MEGA BROKERS ALREADY PAY FINES FOR IT? Sounds to me like to writer is whining.
Geez, amazing posts that cover all the tens of thousands of sleezy horrible mega broker employees with one big paint brush. only one firm was unethical, and within that firm, only one unit. it was egregious, but not all Marsh ee’s are sleezeballs…. the carrier home office leaders are laughing because we are fighting amongst ourselves, when the best answer is for them to do a better job, and use technology better, so that we can work for the meager commissions they pay us to fix their crappy work. They divide and conquer. Contingents are bs. Pay us the right percentage or do a better job so we don’t have to drown in late incorrect policies, hard copy loss runs, incorrect billings, and 5000 specialty applications that the clients don’t value. And quit trying to hold ground on renewals while trying to steal the new business through competing agencies by dropping your pants.
Beg to differ:
It wasn’t just one broker, and it wasn’t just the three named in the article.
It wasn’t just “one unit”, it was corporate strategy for all large accounts.
Yes, they paid fines, but giving up contingents was part of their plea deal with Spitzer of NY and others to avoid criminal prosecution (although some got prosecuted anyway) – I guess Spitzer wanted to nail those most responsible.
Unfortunately, all who work for the megas suffer when only a small number of their fellows were actually involved in the stealing from their clients, but that’s the employer spreading the cost around, far beyond those who were guilty, that’s not the legal system singling them out.
I SAT THRU THE HEARINGS HERE IN NEW YORK CITY, AND IT WAS SAID AT NUMEROUS TIMES THROUGHOUT THE DAY “NO DECISION HAS BEEN MADE” IT IS CLEAR THAT A DECISION HAS BEEN MADE, AS SOMEONE FAMOUS SAID “ME THINKS THOU PROTEST TOO MUCH”….
IT SEEMS THAT THE PANEL MEMBERS FORGOT THAT THE INSURANCE DEPARTMENT APPROVES RATE FILINGS AND BROKERS SELL THE PRODUCTS APPROVED FOR SALE IN THE STATE. THEY BELIEVE THAT BROKERS AND AGENTS MAKE UP THEIR OWN RATES AND PRICES. THEY ARE ALSO UNDER THE IMPRESSION THAT I COULD FORCE A CARRIER TO STAY ON A RISK, REGARDLESS OF ITS UNDERWRITING MERIT. SOME OF THESE INCORRECT ASSUMTIONS MAY BE ATTIBUTERD TO THE FACT THAT THE PANEL MEMBERS HAVE FOUND ALL THIS TO BE TRUE IN “MEGABROKER LAND” ON NUMEROUS OCCASIONS THEY REFEREANCED AN INVESTIGATION THAT HAS UNCOVERED ALL OF THIS,THIS REPORT WAS NEVER IDENTIFIED OR PRESENTED FOR OUTSIDE REVIEW OR COMMENT, YET A HEARING WAS CALLED AND TESTIMONY REQUESTED.
SOMEHOW THIS INVESTIGATION INTO ILLEGAL ACTIVITY TURNED INTO A PARADE OF MEGA BROKERS CLAIMING THEY CAN NO LONGER COMPETE.THE LAUGH OF IT IS THAT THE MEGA’S WHO CALL FOR AN EVEN PLAYING FIELD HAVE BEEN EATING MY LUNCH FOR YEARS. WHAT THEY CLAIM TO BE THE “UNFAIR ADVANTAGE” IS EXACTLY THAT WHICH HAS ALLOWED THEM TO FLOURISH.
MOSTLY THEY HAVE NOT HAD TO COMPETE WITH THE LIKES OF ME BECAUSE THEY WERE ABLE TO NEGOTIATE BETTER DEALS WITH THEIR COMPANY PARTNERS,AND DIDCTATE UNDERWRITING GUIDLINES.
AS WE GO FOWARD IT IS CLEAR THAT WE WILL BE DEALING IN A “NET OF COMMISION WORLD”. WILL THIS MAKE IT IMPOSSIBLE FOR CARRIERS TO NEGOTIATE BETTER DEALS WITH BIGGER BROKERS?
Mr Conte… has anyone ever told you that typing a post or email all in caps comes across like your shouting and the post becomes difficult to read.
Searching against this quest of some tempo fashionable – i estimate stroke of luck is more advanced than search engines