Big ‘I’ Denounces Consumer Group Commission Study

The Independent Insurance Agents & Brokers of America (the Big I) has strongly denounced the claims made against independent agents and brokers by the Consumer Federation of America as “irresponsible.”

According to the Big I, the CFA report (see lead story in today’s Insurance Journal newsletter) makes “unsupported and misleading statements about the way independent insurance agents and brokers work, resulting in irresponsible and incomplete advice to consumers. It incorrectly correlates incentive compensation, which is used in nearly every sales industry in the country to reward sales performance, with unsubstantiated and baseless claims that independent agents or brokers may be induced by it to delay filing consumer claims or otherwise not provide the best service to customers.”

Big I CEO Robert A. Rusbuldt maintained that the report is not based on reality. “The study is a tremendous injustice to independent insurance agents and brokers all across America and the honest, professional service they provide to consumers,” Rusbuldt said. “This report is long on speculation and short on facts, and simply does not reflect the realities of the marketplace.”

The independent agent leader claimed that properly structured compensation agreements produce a “win-win-win” situation for the insurer, the agent or broker, and the consumer. “This is accomplished for insurers by aligning the policies it sells with its business strategies, for agents and brokers by rewarding sales excellence. For consumers, it assures access to a choice of policies with appropriate coverage and competitive prices while promoting meaningful risk management,” he stated.

“The short-sighted analysis in the report emphasizes only price as a basis for selecting insurance policies, when there are many other important factors affecting consumers’ insurance decisions, such as coverage, carrier financial strength, and service. The report’s oversimplification is irresponsible in discussing products with the complexity the report acknowledges to be the case for insurance policies.”

Rusbuldt further questioned the CFA’s claim that the industry is anti-competitive, arguing that “stiff competition in the insurance marketplace means that independent agents and brokers inevitably would be out of business if they didn’t meet the needs of customers.
The hallmark of a free market is that the consumer has choices. If independent agents or brokers did not offer choices for comprehensive coverage options through a range of products at competitive prices, supported by quality service, they inevitably would lose customers. It would not only be unethical but also would be a poor business decision against their interests for independent agents and brokers to provide anything less than outstanding service to customers.”

Although he said it acknowledges that most insurance agents are honest, he criticized the CFA study for doing “a tremendous disservice to independent agents and brokers and consumers alike by discounting entirely the value that independent agents and brokers provide.”

“Independent agents and brokers invest substantial time to identify consumers’ wants and needs, investigate the marketplace for coverage to meet those wants and needs, and offer choices of coverage, price, service, and carrier financial strength,” Rusbuldt said. “This array of choice and personalized service is an advantage that captive agents and direct writing carriers cannot offer to consumers.”

The Big “I” is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally.

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