Risk Mgrs are mostly on larger accounts and a number of these are fee based to Broker. The majority of independent agents do not deal with Risk Mgrs. Independent agts work for their insureds and due to competive market, they cannot direct business for higher premiums. Risk mgr do not care about underwriting, they just want cheaper price and more coverages.
How did a few large brokers being caught with their hands in the cookie jar mushroom into a call for ending all bonus payments? Surely some of the RIMS member organizations receive extra compensation in some form. I hope that the agency force will indignantly stand up to RIMS with new-found backbone that was lacking in when Spitzer attacked.
Risk Manager in FL, PLJ and TX – Thank you guys for elevating the level of discussion. Although I believe commission based compensation puts brokers at odds with their clients (insurance buyers) I suppose one person/firm is not going to change anything. I think that is really the role of a regulatory agency (maybe an insurance equivalent of the SEC?). But then – I\’m a Democrat. However, those of us who believe that insurance brokers can be an honorable profession that does real service for its clients (buyers – not sellers) need to look for ways to raise the standards – both educational and ethical – of the brokerage biz.
I know I\’m in the minority with this opinion. But do appreciate the opportunity to vent.
Sales Rep – I am deeply disturbed that a small group of commercial consumers feel this way, but let\’s step back and take a look at this…
1) Maybe the wording \”contingency\” is the problem.
This type of practice is done amongst many different fields and disciplines. This is done with different names (i.e. Rewards or Loyalty programs) and different programs (increased marketing by many companies). Why target insurance companies? It is the producer\’s duty to might the needs of his customer, bottom line.
2) By \”spreading the wealth\” and using multiple companies producer\’s encourage competition and keep over price low.
The last thing we need in the insurance industry is monopolistic competition. Not only does this hurt the consumer (with lower prices) but more business would go to the few that dominate the market. Contingency plans promote competition and give equal opportunity, along with competitive priced products to those who need it the most. But overall, price remains low.
There is regulatory accountablity in the agent/broker profession. Although a Risk Manager, I am licensed mult-lines in Florida and non-resident in 6 other states. Up to now, it is regulated onto the agent individually and only state by state as the individual is licensed. Every state has a hot-line to the commissioner for consumer complaints. Just last year Florida has begun to require the agency/brokerage to be licensed as well. This is a step in the right direction, but until there is true national accountability, regulation is there but very unorganized for national concerns. I am also torn on Federal Regulation of agents/brokers when all insurance is regulated, rated and filed by state.
I have never personally experienced being at odds with the broker because their compensation is commission or contigency based. I just can\’t relate to that. Maybe because I just don\’t feel threatened by it. I appreciate your comments as they come from your experience.
…we are no longer hosting our all expense paid annual golf outing and financial seminar due to fallen revenue. But rest assured, next year at RIMS, we will still provide dinner and libation for you and your spouse (to show her what a big hitter you are). However, we can no longer afford the usual Capital Grille with it\’s fine wine, but will belly up and pay for Mickey D\’s and grape juice, business casual. Respectfully, Your Broker
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Risk Mgrs are mostly on larger accounts and a number of these are fee based to Broker. The majority of independent agents do not deal with Risk Mgrs. Independent agts work for their insureds and due to competive market, they cannot direct business for higher premiums. Risk mgr do not care about underwriting, they just want cheaper price and more coverages.
How did a few large brokers being caught with their hands in the cookie jar mushroom into a call for ending all bonus payments? Surely some of the RIMS member organizations receive extra compensation in some form. I hope that the agency force will indignantly stand up to RIMS with new-found backbone that was lacking in when Spitzer attacked.
Risk Manager in FL, PLJ and TX – Thank you guys for elevating the level of discussion. Although I believe commission based compensation puts brokers at odds with their clients (insurance buyers) I suppose one person/firm is not going to change anything. I think that is really the role of a regulatory agency (maybe an insurance equivalent of the SEC?). But then – I\’m a Democrat. However, those of us who believe that insurance brokers can be an honorable profession that does real service for its clients (buyers – not sellers) need to look for ways to raise the standards – both educational and ethical – of the brokerage biz.
I know I\’m in the minority with this opinion. But do appreciate the opportunity to vent.
Sales Rep – I am deeply disturbed that a small group of commercial consumers feel this way, but let\’s step back and take a look at this…
1) Maybe the wording \”contingency\” is the problem.
This type of practice is done amongst many different fields and disciplines. This is done with different names (i.e. Rewards or Loyalty programs) and different programs (increased marketing by many companies). Why target insurance companies? It is the producer\’s duty to might the needs of his customer, bottom line.
2) By \”spreading the wealth\” and using multiple companies producer\’s encourage competition and keep over price low.
The last thing we need in the insurance industry is monopolistic competition. Not only does this hurt the consumer (with lower prices) but more business would go to the few that dominate the market. Contingency plans promote competition and give equal opportunity, along with competitive priced products to those who need it the most. But overall, price remains low.
To RNR_Risk,
There is regulatory accountablity in the agent/broker profession. Although a Risk Manager, I am licensed mult-lines in Florida and non-resident in 6 other states. Up to now, it is regulated onto the agent individually and only state by state as the individual is licensed. Every state has a hot-line to the commissioner for consumer complaints. Just last year Florida has begun to require the agency/brokerage to be licensed as well. This is a step in the right direction, but until there is true national accountability, regulation is there but very unorganized for national concerns. I am also torn on Federal Regulation of agents/brokers when all insurance is regulated, rated and filed by state.
I have never personally experienced being at odds with the broker because their compensation is commission or contigency based. I just can\’t relate to that. Maybe because I just don\’t feel threatened by it. I appreciate your comments as they come from your experience.
…we are no longer hosting our all expense paid annual golf outing and financial seminar due to fallen revenue. But rest assured, next year at RIMS, we will still provide dinner and libation for you and your spouse (to show her what a big hitter you are). However, we can no longer afford the usual Capital Grille with it\’s fine wine, but will belly up and pay for Mickey D\’s and grape juice, business casual. Respectfully, Your Broker