I have an idea….
All of you cheated RIMS members just agree (contractualy) to pay 10% of your net insurance cost to whatever broker you wish – FLAT, UP FRONT, BEFORE THE EFFORT BEGINS. Pay like you do for a chair, a grapefruit or a prostitute – up front. Who needs contingent revenue then?
Thankfully, I do not need to deal with them. I wonder if the companies they represent make such disclosures to their customers?
If the Risk Manager was properly performing their duty to their employer or client they would seek out the most competitive offers of insurance and premium. What should the client care if the broker made 10% or 50% commission on the risk as long as the product was the best available in the marketplace.
Just as we may earn rewards at year end for helping a company achieve a profitable year, I am sure many risk managers receive year end bonuses from their employer for a job equally well done. Are they willing to forgo this bonus?
Let\’s also take this to the next step – Wall Street. Thank you stock brokers for pushing the stock of the week on us and making millions in year end bonuses based on your success of pushing failed stocks on the elderly or the big pension fund. Is Wall Street willing to give up their year end bonuses?
It is time to set the record straight. First this was a bid rigging issue then an issue of upfront pre-payment of bonus commission for the promise to place profitable business during the year. This was never an issue of paying a bonus commission for a past job well done. This was an issue of paying off the large brokers to obtain large blocks of business, tomorrow!
Let\’s make the playing field level. Pass a Federal law that states, every time a product or service is sold a disclosure must be made regarding additional benefits paid to the sales force.
Example:I recently had a new furnace/air conditioner appliance installed in my home. When I called the HVAC dealer to settle up I was told that the owner(My insured) was on an extended vacation provided by the manufacturer of the unit I purchased. Should I be offended by this lack of disclosure Mr. Spitzer.
The list of bonus plans are endless. don\’t even get me started on auto dealer incentives. Or how about furnature stores, mortgage brokers, contractors who come in under bid, all the way down to lawn mower sales people.
I really don\’t think the Government should open up this issue unless we are ready to go for it accross the board.
Don\’t you just love it when these leaches yell foul? May they should give up all those free lunches and dinners, gifts, golf games and other perks they get from their brokers! Biggest parasites in the business.
I want to buy the best coverage at the lowest price. I pay my broker a percentage of the price I pay. In other words, the more I pay for insurance (against my interest) the more money the broker makes (in his/her interest).
Perhaps the whole thing should be done on either an upfront cost basis or a bill by the hour basis.
…we\’d take the plunge and eliminate commissions as a method of Broker remuneration in their entirety. Brokers could charge transactional fees, an hourly rate; or be put on a retainer by the client. Brokers could command an appropriate amount that reflects their level of expertise and the service levels that they provide – just like laywers or accountants. Insurance premiums would drop from Gross to Net, Expense Ratios would decrease, profitability for carriers would go up and even greater pricing competition could occur. Carriers could explain the adjustments they would take on growth to the \”Street\” as a transitional period to improve the cost of doing business. The entire conversation about commissions would come to an end. Yes, some Brokers wouldn\’t be able to cope and would close their doors, but that\’s called the free market.
Congrats to all of you who have responded to this article. Too bad those who came up with the declaration won\’t read it. They are so ignorant of the way the independent agency system works they can\’t possibly take an informed stance. In our agency, producers have no clue as to where we stand profit sharing wise with our carriers. This eliminates even the possibility of conflict. Who would do this anyway? You have to present the best value to your customer/prospect or you don\’t make the sale. Period.
Thank you to both \”MD\” and \”Buyer\”. You guys are exactly correct. Receiving commission from an insurer for sale of their product aligns the prodicer\’s interest with the insurer – not the insured. Contingent commissions are even worse when it comes to misaligning the interests of brokers and their alleged clients – insurance buyers. There is no way around this conclusion even if \”…this has always been the way we\’ve done it.\” Commission based compensation favors producers who make lots of sales – NOT brokers who offer the best service & most expertise to their clients. But the entrenched brokerage community achieved \”success\” by sales – not technical competence. So the management of most brokerages is in no position to encourage change (in compensation mechanisms) in the interests of their clients.
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I have an idea….
All of you cheated RIMS members just agree (contractualy) to pay 10% of your net insurance cost to whatever broker you wish – FLAT, UP FRONT, BEFORE THE EFFORT BEGINS. Pay like you do for a chair, a grapefruit or a prostitute – up front. Who needs contingent revenue then?
Thankfully, I do not need to deal with them. I wonder if the companies they represent make such disclosures to their customers?
If the Risk Manager was properly performing their duty to their employer or client they would seek out the most competitive offers of insurance and premium. What should the client care if the broker made 10% or 50% commission on the risk as long as the product was the best available in the marketplace.
Just as we may earn rewards at year end for helping a company achieve a profitable year, I am sure many risk managers receive year end bonuses from their employer for a job equally well done. Are they willing to forgo this bonus?
Let\’s also take this to the next step – Wall Street. Thank you stock brokers for pushing the stock of the week on us and making millions in year end bonuses based on your success of pushing failed stocks on the elderly or the big pension fund. Is Wall Street willing to give up their year end bonuses?
It is time to set the record straight. First this was a bid rigging issue then an issue of upfront pre-payment of bonus commission for the promise to place profitable business during the year. This was never an issue of paying a bonus commission for a past job well done. This was an issue of paying off the large brokers to obtain large blocks of business, tomorrow!
Let\’s make the playing field level. Pass a Federal law that states, every time a product or service is sold a disclosure must be made regarding additional benefits paid to the sales force.
Example:I recently had a new furnace/air conditioner appliance installed in my home. When I called the HVAC dealer to settle up I was told that the owner(My insured) was on an extended vacation provided by the manufacturer of the unit I purchased. Should I be offended by this lack of disclosure Mr. Spitzer.
The list of bonus plans are endless. don\’t even get me started on auto dealer incentives. Or how about furnature stores, mortgage brokers, contractors who come in under bid, all the way down to lawn mower sales people.
I really don\’t think the Government should open up this issue unless we are ready to go for it accross the board.
Don\’t you just love it when these leaches yell foul? May they should give up all those free lunches and dinners, gifts, golf games and other perks they get from their brokers! Biggest parasites in the business.
I want to buy the best coverage at the lowest price. I pay my broker a percentage of the price I pay. In other words, the more I pay for insurance (against my interest) the more money the broker makes (in his/her interest).
Perhaps the whole thing should be done on either an upfront cost basis or a bill by the hour basis.
If You Brand It, They Won’t Just Buy, They’ll Buy In.
Pick up their new publication: Welfare Works.
Why are Employee Benefits experts and Risk Managers the first let go in coroprate down sizings?
That might be a better use of membership dues to research that one.
…we\’d take the plunge and eliminate commissions as a method of Broker remuneration in their entirety. Brokers could charge transactional fees, an hourly rate; or be put on a retainer by the client. Brokers could command an appropriate amount that reflects their level of expertise and the service levels that they provide – just like laywers or accountants. Insurance premiums would drop from Gross to Net, Expense Ratios would decrease, profitability for carriers would go up and even greater pricing competition could occur. Carriers could explain the adjustments they would take on growth to the \”Street\” as a transitional period to improve the cost of doing business. The entire conversation about commissions would come to an end. Yes, some Brokers wouldn\’t be able to cope and would close their doors, but that\’s called the free market.
Congrats to all of you who have responded to this article. Too bad those who came up with the declaration won\’t read it. They are so ignorant of the way the independent agency system works they can\’t possibly take an informed stance. In our agency, producers have no clue as to where we stand profit sharing wise with our carriers. This eliminates even the possibility of conflict. Who would do this anyway? You have to present the best value to your customer/prospect or you don\’t make the sale. Period.
Thank you to both \”MD\” and \”Buyer\”. You guys are exactly correct. Receiving commission from an insurer for sale of their product aligns the prodicer\’s interest with the insurer – not the insured. Contingent commissions are even worse when it comes to misaligning the interests of brokers and their alleged clients – insurance buyers. There is no way around this conclusion even if \”…this has always been the way we\’ve done it.\” Commission based compensation favors producers who make lots of sales – NOT brokers who offer the best service & most expertise to their clients. But the entrenched brokerage community achieved \”success\” by sales – not technical competence. So the management of most brokerages is in no position to encourage change (in compensation mechanisms) in the interests of their clients.