Reading this article I am not won over that altering the rebating laws doesn’t affect the smaller agency or independent. The claim is that they are different markets. The rebating law covers the entire market.
It would further segregate the markets and make it more difficult to make a jump from one market to another.
Providing competitive pricing is in the PRICING, not in the rebate. (Can you point out when the rebate was distributed evenly to the company being refunded, not the one who pocketed it silently for steering the business in a certain direction?)
Anti-rebating laws are not limited to the insurance industry, and with good reason. Rates and pricing should apply appropriately across the board within a given industry, not discounted for the biggest, most able-to-pay shark in the tank.
Oh, please. Talking about pricing being “fair” to consumers across the board is nonsense in an industry with so little transparency on broker compensation. Different insurance companies have different commission schedules. Does the consumer know the difference when a policy is placed with a higher commission-paying insurance company, meaning the consumer paid more simply due to the higher commission? Of course not. And if the broker rebated the additional premium, how would that hurt consumers exactly? How about Contingency Agreements? Silly disclaimers that don’t go into financial detail about the value of each carrier’s agreement certainly disadvantage consumers if – and you know this happens at some agencies – placements are influenced by the expected Contingency payment.
Rebates aren’t necessary for fair pricing according to expense differentials for small, medium, and large risks. Experience rating and retro-rating insurance policies achieves the desired goal of rate equity according to expense and loss cost differentials due to risk differentials and not due to random variance. According to regulatory language, “…rates must not be unfairly discriminatory…”, and rebates opens the door for abuse of this requirement as they are paid according to the discretion of the insurer.
Rebates paid under well-defined criteria that satisfies regulatory requirements for equitable rates are not rebates. They are retro adjustments, profit commissions, sliding scale commissions, etc.
Night, do you remember the infamous bid rigging scandal of Marsh Mac and several large insurance companies with the biggest fish being AIG? Lot’s of funny business going on back then and I don’t think anyone went to jail for it.
So painfully short-sighted and narrow-minded. Sounds like someone has a very specific plan in mind that runs afoul of rebating rules and wants to throw the baby out with the bathwater. There are still some very disreputable, unsavory characters in our business. Keeping rebating illegal protects the consumer from extravagant promises including the promise to provide a service they are not qualified to provide. Then, what prevents big firms with deep pockets offering huge, unsustainable rebates to buy up market share? How is the consumer benefitted when this forces small companies to sell or merge, or worse just force them out by throwing money at all of their customers, reducing the number of competitors the consumer has access to. Protecting consumers means INCREASING their options. This means having a somewhat level playing field and limiting competitive advantage to things like being good at what you do, rather than having deep pockets. Now consider how many foreign companies are in the insurance business who already have an advantage by paying lower taxes. Sure, why not let them give all that money to the consumer and drive all domestic companies out of business. Can we please keep the insurance business about being a good insurance professional?
Reading this article I am not won over that altering the rebating laws doesn’t affect the smaller agency or independent. The claim is that they are different markets. The rebating law covers the entire market.
It would further segregate the markets and make it more difficult to make a jump from one market to another.
Providing competitive pricing is in the PRICING, not in the rebate. (Can you point out when the rebate was distributed evenly to the company being refunded, not the one who pocketed it silently for steering the business in a certain direction?)
Anti-rebating laws are not limited to the insurance industry, and with good reason. Rates and pricing should apply appropriately across the board within a given industry, not discounted for the biggest, most able-to-pay shark in the tank.
Oh, please. Talking about pricing being “fair” to consumers across the board is nonsense in an industry with so little transparency on broker compensation. Different insurance companies have different commission schedules. Does the consumer know the difference when a policy is placed with a higher commission-paying insurance company, meaning the consumer paid more simply due to the higher commission? Of course not. And if the broker rebated the additional premium, how would that hurt consumers exactly? How about Contingency Agreements? Silly disclaimers that don’t go into financial detail about the value of each carrier’s agreement certainly disadvantage consumers if – and you know this happens at some agencies – placements are influenced by the expected Contingency payment.
Rebates aren’t necessary for fair pricing according to expense differentials for small, medium, and large risks. Experience rating and retro-rating insurance policies achieves the desired goal of rate equity according to expense and loss cost differentials due to risk differentials and not due to random variance. According to regulatory language, “…rates must not be unfairly discriminatory…”, and rebates opens the door for abuse of this requirement as they are paid according to the discretion of the insurer.
Rebates paid under well-defined criteria that satisfies regulatory requirements for equitable rates are not rebates. They are retro adjustments, profit commissions, sliding scale commissions, etc.
Night, do you remember the infamous bid rigging scandal of Marsh Mac and several large insurance companies with the biggest fish being AIG? Lot’s of funny business going on back then and I don’t think anyone went to jail for it.
So painfully short-sighted and narrow-minded. Sounds like someone has a very specific plan in mind that runs afoul of rebating rules and wants to throw the baby out with the bathwater. There are still some very disreputable, unsavory characters in our business. Keeping rebating illegal protects the consumer from extravagant promises including the promise to provide a service they are not qualified to provide. Then, what prevents big firms with deep pockets offering huge, unsustainable rebates to buy up market share? How is the consumer benefitted when this forces small companies to sell or merge, or worse just force them out by throwing money at all of their customers, reducing the number of competitors the consumer has access to. Protecting consumers means INCREASING their options. This means having a somewhat level playing field and limiting competitive advantage to things like being good at what you do, rather than having deep pockets. Now consider how many foreign companies are in the insurance business who already have an advantage by paying lower taxes. Sure, why not let them give all that money to the consumer and drive all domestic companies out of business. Can we please keep the insurance business about being a good insurance professional?