In George Orwell's allegorical novel Animal Farm, thecollective's credo was ”All animals are equal” —until the leaders change the credo to ”Allanimals are equal, but some animals are more equal thanothers.”

The same might be said for regulators' handlingof contingent commissions.

In one of my first blog posts at “Agent for Change,” I threw outthe question of whether contingent commissions should be anindustry practice, considering the controversy surroundingthem. At the time, N.Y. AG Cuomo was reexamining the issue andthe consensus was that contingent commissions were bad.

More than a year later, the tide may be turning — at leastfor some. This week, state regulators and AGs in New York,Illinois and Connecticut have allowed Willis, Aon and Marsh tobring back contingent commissions. The thinkinggoes that the three brokers and their carriers have implementedenough transparency to free them from the settlementsthey signed in 2005. The new agreement also reduces the brokers'disclosure requirements in all 50 states to that required in theNew York agent/broker disclosure regulation, released lastweek.

This rankles Main Street agents, who are bothered by thefact that the New York DOI felt it necessary to promulgate itsnew regulation as a condition of the big brokers' release,said Wes Bissett, senior counsel for the Big I. They're so bothered that IIABNY plans on filing a legal challenge, bothto the “substance of the regulation and the manner in which is waspromulgated,” Bissett said in a phone interview. “It is ironic anddisappointing to us that thousands of innocent Main Street agentsare facing a series of costly new burdens and mandates so that theworld's three largest insurance brokers can be freed fromsettlements they voluntarily entered into five years ago,” he said.“The result is thousands of Main Street agents will be paying theprice for what they did.”

Calling the New York regulations “unnecessary” and a“hypothetical, law-school approach” to transparency, Bissett saidsmaller retail agents required to follow the regulations can'tsimply use a boilerplate approach to compliance, and oftenneed to work with outside counsel to develop the rightapproach, making the process time consuming and expensive at a timewhen agencies need to watch every penny.

And relying on a ruling from a regulator rather than goingthrough the legislative process is wrong, too. “Public policyshould be left to lawmakers, not regulators,” he added.

PIANational agrees, calling the New York regulation “burdensome,unnecessary and unwarranted.” Through amicus briefs, publictestimony and other action, PIANY has continued to oppose the reg —even though it does not ban contingency commissions, something PIAmembers have members have vehemently supported, maintainingthat Main Street agents are not mega-brokers and contingentcommission income is critical to their ability to serve theirclients.

Not surprisingly, more sanguine on the subject isCIAB, whosespokesperson in an e-mail stated that, “We've been long-timesupporters of transparency, and long believed that intermediariesshould have the benefit of the same regulatory and legalenvironments, with the freedom to determine their own businessmodels. Now that they do, we believe it's time for theindustry to put this issue behind us and move forward – it's been adistraction for far too long.”

Unfortunately, the end of the issue may not be insight. With consumers still smarting from financialservices bailouts and excuses, overturning some brokers'transparency requirements could very well bring new publicattention to a practice that's contentious at best.