Compensation issues that have been raised in the wake of the recent actions by New York Attorney General Eliot Spitzer were discussed recently by Georgia Insurance Commissioner John Oxendine, Len Brevik, executive vice president and CEO of the National Association of Professional Insurance Agents (PIA) and Kenneth Auerbach PIA National Business Issues Committee chairman.
Oxendine is on a 13-member executive task force on broker activities recently formed by the National Association of Insurance Commissioners (NAIC). The task force is gathering facts and coordinating activities to formulate policy.
“We appreciate the opportunity to meet with Commissioner Oxendine to provide direct input and engage in constructive dialogue,” Brevik said. “As the NAIC task force considers its policy recommendations, it is important that America’s Main Street insurance agents are full participants in the process.”
Brevik said the meeting requested by Commissioner Oxendine is part of a coordinated effort by PIA to ensure that reform efforts are balanced, effective, originate from the states and protect consumers without stifling competition in the marketplace.
Auerbach said it is important for policymakers to understand the difference between the large Wall Street-type insurance brokers that have been investigated by Spitzer and local, retail independent insurance agents across the nation. In addition, he said there is widespread confusion between the compensation arrangements provided to independent insurance agencies in the retail marketplace by their insurers, and the individually negotiated and designed placement service agreements (PSAs) developed by insurers with large brokers that have been the focus of the Spitzer investigation.
“Compensation arrangements between parties are legal in all business dealings, including insurance,” Auerbach said. “PIA supports disclosure to protect consumers. We want to be certain that any proposals are subject to sufficient deliberation, appropriately address the kinds of placement service agreements at issue, and not attempt to restrict legal compensation. Working on commission is key to a robust system of free enterprise.”
PIA will continue to stand behind and defend legal compensation agreements, including profit-sharing between independent agents and their appointed carriers.
The PIA delegation meeting with Commissioner Oxendine also included Jerry Duke, PIA of Georgia executive vice president; Tom Adderhold, PIA of Georgia national director; and Steve Jones, PIA of Georgia president.
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