Insurance executives from four independent agent/broker insurance carriers concur that contingency commissions are an important incentive for carriers to offer producers.
The panelists discussed their views on contingency commissions and other hot topics at the closing session at the 2005 annual Convention of the Alliance of Insurance Agents and Brokers (formerly the American Agents Alliance) in Indian Wells, Calif. Panelists included: Peter Cazzola of Capital Insurance Group, Mark Niehaus of Drive Insurance from Progressive, Gabe Tirador of Mercury Insurance Group and John Mullen of Unitrin Specialty.
The panelists were asked whether they believe the “Spitzer” investigation in New York that has resulted in the indictments of former executives from Marsh & McLennan and other large brokers for steering business to their company may impact contingency commissions.
“Steering and contingency commissions are separate issues,” Mullen said. “Higher commissions does not equate to more business for the company. Most industries use some sort of sales incentive program.”
Tirador added, “Mercury believes contingencies are an important incentive for producers to obtain accurate information on the risks they write. Obtaining accurate information is essential in properly pricing the risk.”
The panel was asked what they believe to be the toughest challenges to overcome. All four concurred that anti-business legislation, regulation and legal issues pose the greatest challenge for their company.
“For the most part, we have systems in place to deal with problems such as natural disasters,” Mullen commented. “But we need a level playing field in which to do business. State regulators and legislators need to learn they need to have a competitive environment.”
Regarding the current soft market, Niehaus said he does not foresee a dramatic hardening of the market through next year. “Insurance shopping is down by about 15% this year. The typical market cycle takes about nine years to go from peak to peak. Nationally, we are on track for the same cycle, although in California that cycle may be a bit longer, thanks to a strong reduction in loss costs.”
The panelists were asked about their level of community involvement.
Cazzola said Capital Insurance Group has been investing heavily in underserved communities. He called on agents and brokers to get involved in their communities. “It will help to strengthen our message to legislators. They should know how active agents and brokers are in their local district.”
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