The Western Insurance Agents Association has issued a statement saying the settlement that St. Paul Travelers has just reached with attorneys general from Connecticut, Illinois, and New York is the latest attempt by an insurer to haphazardly and expediently put to rest allegations of bid-rigging and anti-competitive behavior.
“On behalf of our members and the thousands of independent agents and brokers that work tirelessly for St. Paul Travelers and the other insurers, insurers who evidently prefer regulatory appeasement to principle, shame on them for agreeing to discontinue or restrict incentive compensation. This and other similar settlements restrict or eliminate the sort of compensation that is the lifeblood of the free market system; compensation for placing or maintaining sufficient insurance business with the insurer to achieve any measure of profitability,” said Michael D’Arelli, vice president of legislative and regulatory affairs for WIAA.
According to WIAA, agents and brokers are not only shocked and dismayed that insurers would allow such self-centered expediency to blind insurers to the good policy inherent in providing incentives that reward profitable business, but St. Paul Travelers and other insurers have also agreed to support legislation and regulations in the United States to abolish compensation that rewards any measure of profitability.
“Profitability incentives are a legitimate form of compensation and the fact that there are a few bad apples out there does not mean the rest of the industry is rotten to the core. However, the rotten deals insurers are cutting with attorneys general implies otherwise, and not so subtly,” said D’Arelli. “Through the terms of these settlement agreements, insurers are dignifying the allegations of the regulators, true or not,” D’Arelli said.
Over the past couple of years, while insurers sat on the sidelines, the agent and broker community fought many legislative battles across the country to preserve the right to continue to earn compensation for placing or maintaining business with an insurer and achieving a measure of profitability, WIAA said. “This hard work is in danger of being swallowed-up as insurers cut these awful settlement deals with regulators, and agents and brokers are mad as hell about it,” said D’Arelli.
WIAA said it “condemns the alleged conduct of insurers and producers who have violated and undermined the public’s trust and confidence. Those insurers and producers who have engaged in illegal bid-rigging and anti-competitive behavior should be held accountable to the fullest extent of the law. However, the extent and scope of wrongdoing alleged by the politicians who have exploited this crisis for political gain has not been borne-out by the evidence.
“Shame on insurers who enter into settlement agreements that punish the good deeds of many for the bad deeds of a few. The overwhelming majority of agents and brokers go the extra mile each and every day to engender the public’s trust and confidence, and poorly contrived settlement agreements that smack of cowardice and an implicit admission of wrongdoing erode that trust and confidence,” the statement said.
The Western Insurance Agents Association represents more than 900 insurance agencies in California, Nevada, Arizona and New Mexico.
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