Judge Dismises Corruption Charges Against Marsh, Brokers, Insurers

October 2, 2007

  • October 2, 2007 at 9:52 am
    Legacy Broker says:
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    Tom, I won’t belabor the point, and will only post this explanation once. The auto dealer analogy is really not appropriate here. The lawyer analogue seems more apt, in that P&C insurance brokers are actually highly specialized contract attorneys dealing exclusively with insurance contracts. Insurance brokers have a duty to their customers (and in some states are required by law) to disclose their income when they work on a commission basis IF they charge a fee for service.

    The Spitzer investigations deal with business is placed in a company for the benefit of the broker, NOT for the benefit of the client, a conflict of interest. In many cases, Spitzer demonstrated that Marsh and others manipulated proposals and bids to ensure contingent commissions for Marsh, where it was not in their clients’ interest to do this.

    As a broker who worked for was a larger mid-sized broker that did the same on small to middle market accounts, and I deplored the practice that I was instructed to participate in.

    It is prevalent in the industry on varying scales across the P&C brokerage spectrum. If brokers want to be respected professionals in the business community (and not hounded by trial lawyers as if they are dishonest crooks, as some here have suggested) they need to hold themselves to a higher standard of transparency and fair play.

    I am a believer in a paradigm shift to merit based compensation in the insurance brokerage area. If a good attorney or risk manager can command a good fee, why not an insurance broker if they provide service of value to the client they represent?

    The more able brokers would command a higher fee, the compensation structure would be transparent and the more successful brokers will earn their money based upon their expertise and ability in representing clients in their dealings with insurers.

    I am convinced that those screaming loudest about loss of contingent commissions are those who are getting a free ride or are worried about a young, bright kid succeeding in a field that seemed like an easy bet, coasting on a book of business they have built up over time. They are worried about the work involved in earning their keep.

    I think a merit-based compensation system would invigorate the field, and still allow those at the bottom of the heap to charge a reasonable fee close to the commissions they were previously earning (less the contingents, of course!)

  • October 2, 2007 at 11:13 am
    anonymous says:
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    Perhaps now the industry will finally recognize that Eliot Spitzer was loud wrong and totally cheap-shotted Marsh brokers when he wrote that lop-sided civil brief. It is really sad the amount of damage that Spitzer has done.

  • October 2, 2007 at 11:20 am
    Nobody Important says:
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    How can you say that? He is the governor now after all.

  • October 2, 2007 at 1:59 am
    tom says:
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    Anon hit the nail on the head. Eliott Spitzer did more damage than any other individual or companies, in his quest to be governor of NY.
    He opened up litigation to the greedy trial attorneys as well as greedy clients around the U.S. thinking they could get something for nothing. He tried to implicate ALL insurance agents and companies to fraud, collusion and steering of business. We have spent tens of thousands of dollars to defend ourselves against these frivilous lawsuits that were totally unfounded. Spitzer put all of our reputations in question, totally without merit. The collusion and steering of business was limited to one or two companies in NY, yet over 21 companies and agents had to defend their practices and spend untold thousands in defense costs.
    This judge was absolutely correct in throwing this suit out and judges around the country should do the same.
    Once Spitzer got Marsh, trial attorney’s in nine states thought they could dip their hands in the cookie jar grab that golden financial ring.
    I have spent some sleepless nights aggrevated that my reputation and insurance practice was put into question. Sadly I do not have any recourse to recoup what I lost, just chalk it up to experience and greed from clients.

  • October 2, 2007 at 2:18 am
    wondering says:
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    what is up with Gilman trial ?

  • October 2, 2007 at 2:20 am
    tom says:
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    not familiar with it.

  • October 2, 2007 at 2:20 am
    Legacy Broker says:
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    Nothing could be further from the truth…

    M&M clearly fixed prices through their schemes of B rates and blocking markets, as well as using these to bolster contingent commissions. Some of the players have been convicted of felony crimes. Marsh has acknowledged these problems.

    This criminal activity has been going on for many years…simply not racketeering under the statute, but still criminal and still price fixing according to the courts.

    Spitzer did the insurance industry a grdeat service by leveling the playing field and putting a stop to practices that had long plagued the industry and stifled competition.

    This subject case could not be won, their strategy was flawed from the start, and it was a derivative action that did not have the brilliance of Spitzer’s criminal complaints.

    I would say that it shows up Spitzer’s brilliance…your logic is as flawed as the plaintiff’s in this case!

  • October 2, 2007 at 2:23 am
    Casual Observer says:
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    What’s still very painful to watch is the price of Marsh’s stock, still having not recovered, despite the elimination of a few bad apples. My respected colleagues at Marsh have been gravely impacted, none of whom deserved it. And then, NY elects Spritzer as Governor! Those people are nearly as oblivious as the good citizens of the Commonwealth of Massachusetts!

  • October 2, 2007 at 2:51 am
    tom says:
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    Sorry I will disagree with your comments. There may have been a couple of individuals who were theives and certainly greedy. But that was limited to Marsh and AIG. Contingent commissions are not necessarily bad and no different than any other industry who provides incentives to their sales people. Do people abuse them yes, but not all of us are crooked.
    What Spitzer’s suit did was open up all insurance agents and company to scrutiny whether right or wrong. In addition, trial attorneys sank their teeth into it, indicting all agents and companies and filed suits in 9 states. Here in Florida the suit mirrored that of NY, one problem this state does not allow an agent to charge a fee and collect a commission. So the suit was flawed from the beginning and there was never steering of business since our agency only represented one company.
    Don’t tell me my logic is flawed when we use state filed rates to quote gl & auto, the company uses NCCI filed work comp rates and the client made the decision to change his insurance, not us! Now I have to defend myself, my company and the insurance company has to spend tens of thousands in defense cost because of what? Because Spitzer indicted the insurance industry as a whole. By the way we have never collected a contingency commission.
    So until your butt is on the line questionning your ethics and business practices don’t tell me my logic is flawed Mr. Spitzer.

  • October 2, 2007 at 3:26 am
    Supporter of Tom says:
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    Tom, I agree whole Heartedly with your statements. Legacy Broker, the companies and individuals who participated in or are participating in this manner should be punished. However, a shotgun approach to sueing insurance companies was certainly uncalled for and wasted a lot of money.



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