PIA Slams Plumeri's Call At RIMS To End Fees

NU Online News Service, April 19, 9:52 a.m. EDT?A call by the head of the Willis brokerage for an end to contingent commissions at an industry conference yesterday was immediately blasted as "hypocritical" by a leading insurance agents group.

The National Association of Professional Insurance Agents reacted to a speech by Joseph Plumeri, CEO of Willis Group at the annual conference of the Risk and Insurance Management Society in Philadelphia.

Mr. Plumeri said that the controversial contingent commissions, which have sparked civil action by clients and prosecutors, should be abolished throughout the insurance industry to include mega-brokerages as well as retail independent agents.

"This is a hypocritical suggestion, in that it comes from the CEO of the nation's third-largest insurance broker--a firm that earlier this month agreed to pay $51 million in restitution to policyholders to resolve concerns about anticompetitive practices involving incentive fees in property and casualty insurance sales," said Leonard C. Brevik, executive vice president and CEO of PIA National.

According to documents that were part of the agreement with the New York and Minnesota attorney generals, Willis, which admitted no guilt, was involved in steering customers to insurers that paid placement agreements and padding costs by unnecessarily routing business through its wholesale brokerage unit.

"The timing of Mr. Plumeri's comments makes them particularly dubious," said Mr. Brevik.

"This is another indication of people talking about the insurance industry in broad terms without having a complete understanding of all the issues involved," Mr. Brevik said. "One mega-broker's experience should not be extended to pontifications regarding the entire industry."

Mr. Brevik remarked that New York's Attorney General Eliot Spitzer, whose investigation unleashed an avalanche of insurance industry probes by other states, has clarified his position to distinguish between mega-brokers and Main Street agents.

Mr. Spitzer in speeches, Mr. Brevik noted, has differentiated between industry "sectors and the honesty of its participants. So much so that in January, Mr. Spitzer said he did not think contingent commissions should be banned industrywide. And, in February, he said the vast majority of agents and brokers are honest, and he cautioned against anyone generalizing or jumping to conclusions."

Mr. Brevik added he hopes Willis CEO Plumeri, like Eliot Spitzer, develops a better understanding of the various participants in the insurance industry.

The Alexandria-Va.-based PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance, but specialize in coverage of automobiles, homes and businesses.

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PIA Slams Plumeri's Call At RIMS To End Fees

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