There has never been nor is there now anything inherently wrong with Contingency Commissions. There are simular “incentives” in most every major industry. What WAS wrong and they should have sent those guilty of doing it to jail, was BID RIGGING. Somehow they covered their tracks by throwing all of us “under the bus” when they brought Contingency Commissions into the frey and somehow, and I really don’t understand how this happened , got by with it. If an agent or broker abused the Contingency principal by shifting clients from one company to another just to qualify or improve on a Contingency yield with another carrier, that would be an abuse of the system and certainly not in the best interest of his client; but that was not the issue in this case. Bottom Line – Contingencies got a Bum Rap and guilty people got by without being punished personally for breaking the law.
As part of their “settlements” for breaking laws, Marsh, AON and Willis also agreed to “work with” the NY AG’s Office and the Insurance Department to impose the contingency bans and disclosure requirements on those who DIDN’T BREAK THE LAW.
Marsh, AON and Willis took the settlements to save their butts. The laws they broke are still on the books. The reason they don’t like their settlements now is they can’t find another way to bash what’s left of their clients.
As far as legacy goes, maybe Spitzer was a victim of “bid-rigging” with his “girl friends” – let’s see what “settlement” he gets now.
We should get a law passed that requires agents to share the contingent commissions with the underwriters. Ha, Ha. Sure would be nice!
But in reality I agree with most posters here, contingent commissions does not equal bid rigging. Contingent commissions is a performance bonus, and bid rigging is a criminal way of ripping off your own customers. Big difference.
For the first in history the little guy is on a level playing field and the Big Boys don’t like it.
When they had the chance to stand up for your “Rights”, they faded away into the woodwork; now you want to replay the game. Sorry chump it’s over and the industry has a very LEVEL PLAYING FIELD FOR THE FIRST TIME.
I hope that the principals in this story read these posts; they will quickly realize that the smoke and mirror approach is not going to work. We all know what the real issue is and why it is being re-visited. But let’s be clear about this: money was the cause of the problem and these megabrokers responded by trying to throw money at it to make it go away. Now after some hindsight, they want to reverse? So where does the money go now? Who’s campaign, PAC, or favorite charity is going to benefit from a large contribution, just before an election? Stay tuned, folks, the good ol’ boys are still trying to make the rules during the game.
I agree Rick, let’s separate the homeotwn agent from these mega brokers. Let’s also remember the thing they were caught on were contingents based solely on production, not profitability. The small agent only gets the production / profitability contingent. If we put a lot of big garbage accounts with our carriers and they get burned, we get nothing. Not the same with a production only contingent.
This has absolutely NOTHING to do with lower rates. You see the rest of the “smart large brokers” came up with special verbiage and disclosed the contingency commissions, and the practice still continues (as it should). Heck most smaller brokers don’t even go that far as to disclose contingency commission.
Once again, I do not see anything illegal about contingency agreements, and this whole disclosure stuff is BS. Do other industries disclose how they make money?? For the most part “no”, so why should we?????
If we’re talking disclosure, I’d sure love for gas stations to disclose why their prices go up on a daily basis when they are pumping the same gas that was purchased a week earlier????
It is so easy to comment without really knowing the facts. It is not about poor little guys vs mega brokers. Marsh is the only one who was bid rigging, and that was one excess unit. Horrible behavior, but I am sure a bit of B quotes has been a part of many agencies approach. Still bad stuff. Their was nothing illegal found with Willis or Aon, but Spitzer strongarmed to take contingents out.. not illegal, but Spitzer wanted to get headlines, and capitilize on the grey topic of whether it is in the clients interest. Willis took a position prior to settlement, and whether driven or not by Spitzer, has stuck to the concept that if it smells like a conflict, lets just be done with it. So the soft market hurts brokers and contingent loss is a problem,,, but in the end the carriers need to pony up to appropriate revenue for all agents/brokers, and everyone should be transparent.. if you add value, nothing to hide. so let’s quit making this out to be big vs. small.. what is big, what is small and what about the second tier.. it is just oversimplification. Go to work.
I agree with the others who indicate there is nothing wrong with contingencies, per se and tha the mega brokers are playing a “sour grapes” game in the wake of thier admissions and agreements.
Even if states, like NY here, implement regulations requiring something as benign as voluntary disclosure, (which I personally am opposed to) I don’t see how that would prevent anyone who from steering or shifting business to a company that pays more contingency. So, exactly how would disclosure protect consumers (most don’t even ask about it) and what sanctions would be involved if some agent or broker does steer business? (As untoward as that might be, it is not illegal.) Like one poster said, it will just be more paperwork for agents and brokers (with no compensation for it) and perhaps more payroll for the governing agency that will have to hire people to handle the new regulatory paperwork.
But, the people who run our governments, large and small, view their roles as regulating our lives and finding ways to increase their influence over us. Why? Because they know better than we do (never minding that we elected them to office) and they all seek power over their fellow humans. If we all keep that thought in mind, we’d be able to fend off increasing governmental intrusion into our lives.
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There has never been nor is there now anything inherently wrong with Contingency Commissions. There are simular “incentives” in most every major industry. What WAS wrong and they should have sent those guilty of doing it to jail, was BID RIGGING. Somehow they covered their tracks by throwing all of us “under the bus” when they brought Contingency Commissions into the frey and somehow, and I really don’t understand how this happened , got by with it. If an agent or broker abused the Contingency principal by shifting clients from one company to another just to qualify or improve on a Contingency yield with another carrier, that would be an abuse of the system and certainly not in the best interest of his client; but that was not the issue in this case. Bottom Line – Contingencies got a Bum Rap and guilty people got by without being punished personally for breaking the law.
As part of their “settlements” for breaking laws, Marsh, AON and Willis also agreed to “work with” the NY AG’s Office and the Insurance Department to impose the contingency bans and disclosure requirements on those who DIDN’T BREAK THE LAW.
Marsh, AON and Willis took the settlements to save their butts. The laws they broke are still on the books. The reason they don’t like their settlements now is they can’t find another way to bash what’s left of their clients.
As far as legacy goes, maybe Spitzer was a victim of “bid-rigging” with his “girl friends” – let’s see what “settlement” he gets now.
We should get a law passed that requires agents to share the contingent commissions with the underwriters. Ha, Ha. Sure would be nice!
But in reality I agree with most posters here, contingent commissions does not equal bid rigging. Contingent commissions is a performance bonus, and bid rigging is a criminal way of ripping off your own customers. Big difference.
For the first in history the little guy is on a level playing field and the Big Boys don’t like it.
When they had the chance to stand up for your “Rights”, they faded away into the woodwork; now you want to replay the game. Sorry chump it’s over and the industry has a very LEVEL PLAYING FIELD FOR THE FIRST TIME.
The way I read this the article applies to those acting as brokers and not as agent’s.
I hope that the principals in this story read these posts; they will quickly realize that the smoke and mirror approach is not going to work. We all know what the real issue is and why it is being re-visited. But let’s be clear about this: money was the cause of the problem and these megabrokers responded by trying to throw money at it to make it go away. Now after some hindsight, they want to reverse? So where does the money go now? Who’s campaign, PAC, or favorite charity is going to benefit from a large contribution, just before an election? Stay tuned, folks, the good ol’ boys are still trying to make the rules during the game.
I agree Rick, let’s separate the homeotwn agent from these mega brokers. Let’s also remember the thing they were caught on were contingents based solely on production, not profitability. The small agent only gets the production / profitability contingent. If we put a lot of big garbage accounts with our carriers and they get burned, we get nothing. Not the same with a production only contingent.
This has absolutely NOTHING to do with lower rates. You see the rest of the “smart large brokers” came up with special verbiage and disclosed the contingency commissions, and the practice still continues (as it should). Heck most smaller brokers don’t even go that far as to disclose contingency commission.
Once again, I do not see anything illegal about contingency agreements, and this whole disclosure stuff is BS. Do other industries disclose how they make money?? For the most part “no”, so why should we?????
If we’re talking disclosure, I’d sure love for gas stations to disclose why their prices go up on a daily basis when they are pumping the same gas that was purchased a week earlier????
It is so easy to comment without really knowing the facts. It is not about poor little guys vs mega brokers. Marsh is the only one who was bid rigging, and that was one excess unit. Horrible behavior, but I am sure a bit of B quotes has been a part of many agencies approach. Still bad stuff. Their was nothing illegal found with Willis or Aon, but Spitzer strongarmed to take contingents out.. not illegal, but Spitzer wanted to get headlines, and capitilize on the grey topic of whether it is in the clients interest. Willis took a position prior to settlement, and whether driven or not by Spitzer, has stuck to the concept that if it smells like a conflict, lets just be done with it. So the soft market hurts brokers and contingent loss is a problem,,, but in the end the carriers need to pony up to appropriate revenue for all agents/brokers, and everyone should be transparent.. if you add value, nothing to hide. so let’s quit making this out to be big vs. small.. what is big, what is small and what about the second tier.. it is just oversimplification. Go to work.
I agree with the others who indicate there is nothing wrong with contingencies, per se and tha the mega brokers are playing a “sour grapes” game in the wake of thier admissions and agreements.
Even if states, like NY here, implement regulations requiring something as benign as voluntary disclosure, (which I personally am opposed to) I don’t see how that would prevent anyone who from steering or shifting business to a company that pays more contingency. So, exactly how would disclosure protect consumers (most don’t even ask about it) and what sanctions would be involved if some agent or broker does steer business? (As untoward as that might be, it is not illegal.) Like one poster said, it will just be more paperwork for agents and brokers (with no compensation for it) and perhaps more payroll for the governing agency that will have to hire people to handle the new regulatory paperwork.
But, the people who run our governments, large and small, view their roles as regulating our lives and finding ways to increase their influence over us. Why? Because they know better than we do (never minding that we elected them to office) and they all seek power over their fellow humans. If we all keep that thought in mind, we’d be able to fend off increasing governmental intrusion into our lives.