Jeff Jones, senior vice president and chief marketing officer of USI, took a moment to answer a few questions from Insurance Journal regarding the impact current investigations into broker compensation could have on the industry.
Insurance Journal: Do you see any positive fallout from the investigations?
Jones: The brokerage business clearly has increased transparency. Disclosure is key.
IJ: What do you see as the “lasting impact” of the investigations?
Jones: It’s disclosure to the client. The NAIC has drafted a model disclosure approach which will be reviewed on a state by state basis. Once the individual state adopts either the model approach or their own, agents and brokers will have a more specific guidance regarding disclosure and market conduct.
IJ: What, if any, “fallout” have you experienced with clients or other industry professionals?
Jones: Because USI is a middle market broker we have had very few questions from clients. USI had adopted a disclosure policy previously.
IJ: Assuming one of the consequences of the investigations is going to be increased calls for regulation, where do you see consequences?
Jones: It would be great if we could have a federal regulation for commercial accounts, but I don’t see the state system being overturned. We anticipate individual state action which would provide specific guidelines for disclosure and market conduct.
IJ: Do you see, or expect, the investigations to have any effect on premiums? Will companies and risk managers try to obtain lower quotes as a result?
Jones: Nothing going on now with the investigations is going to reduce the costs associated with the personal, small commercial and middle market. I don’t see any changes in pricing for these accounts. Risk managers will be very careful in the pricing of fees, but I don’t see these going down. If anything, some brokers may have to charge higher fees if they are not being subsidized by other forms of disclosed insurer based compensation.
IJ: Do you think Marsh can survive this, and if so why?
Jones: No comment.
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