Declarations

Bigger, Hungrier

“Large brokers enjoy certain advantages of scope and scale. At least in theory, their costs are lower, and they are able to provide a broader array of services. But small brokers are the engines of growth in the insurance market, and larger brokers will continue to acquire them to tap into their growth potential.”

—A new report by Advisen, which says the global economic slowdown will not weigh on large brokers attempt to swallow mid-size, specialized brokers to broaden their overall expertise.

Hiring Hit

“The more qualified the individual was, the less interest they expressed in The Hartford top job.”

—Bob MacDonald, former CEO of Allianz Life of North America and self-described financial services contrarian, criticizing the failure of the Hartford Financial Service Group to hire someone other than former Bank of America executive Liam McGee as its new CEO, claiming the selection “elevates outsourcing to a new and dangerous level.”

Allstate, Agents and the IRS

“Allstate gets to have its cake and eat it, too. Agents bear all of the expenses and risks associated with operating an independent business, but are controlled as employees. Meanwhile Allstate enjoys a huge competitive cost advantage by avoiding expenses associated with pensions, health insurance, 401ks, Social Security and, most importantly, federal taxes.”

—Jim Fish, executive director for the National Association of Professional Allstate Agents (NAPAA), which has petitioned the Internal Revenue Service, questioning whether Allstate has lived up to its side of the bargain since it converted the majority of its sales force from employee to independent contractor status in 2000. The NAPAA, of which an estimated 10 percent of Allstate’s agency force are members, asserts that Allstate had been given tax-advantaged status by promising the IRS that the agents would become true independent contractors and be treated as such.

States vs. Feds

“It is critical that the federal government have access to insurance information in order to ensure that the United States is competitive with its foreign counterparts in global negotiations. At the same time, any state-federal regulatory cooperation agreement must leverage the successful state insurance regulatory system and not preempt state law except in extremely narrow circumstances.”

—Roger Sevigny, NAIC President and New Hampshire Insurance Commissioner, testifying to congress, which is considering greater federal oversight of the state-based insurance regulatory system.

Topics Agencies Legislation Allstate