The Independent Insurance Agents of Texas (IIAT) strongly denounced as inaccurate and misleading, the claims made against independent agents and brokers by the Consumer Federation of America (CFA), a Washington-based consumer advocacy group.
The report makes unsupported and misleading statements about the way independent insurance agents work, and it offers irresponsible and incomplete advice to consumers, said the statewide trade association that represents 1,800 independent insurance agencies in Texas.
“The report wrongly maintains that industry compensation practices encourage independent insurance agents to provide less than the best service and price to customers,” said Bill Harrison Jr., president of IIAT and president of Coleman Company Insurance in San Antonio.
Nearly every sales industry in the country uses some form in incentive compensation to reward sales performance, he said. The CFA study plainly makes unsubstantiated and baseless claims that independent agents are influenced to place business with certain carriers based on these compensation practices.
“The study does a tremendous injustice to independent insurance agents and brokers all across America and the honest, professional service they provide to consumers,” said Robert A. Rusbuldt, CEO of the Independent Insurance Agents and Brokers of America, the national association with which IIAT is affiliated. “This report is long on speculation and short on facts, and simply does not reflect the realities of the marketplace.”
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. Additionally, stiff competition in the insurance marketplace means that independent agents 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,” Rusbuldt said. “If independent agents 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 for independent agents to provide anything less than outstanding service to customers.”
Although it acknowledges that most insurance agents are honest, the CFA study does a tremendous disservice to independent agents 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 author of the CFA consumer study is J. Robert Hunter, a former Texas insurance commissioner.
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