WASHINGTON--The Professional Insurance Agents of America has joined the chorus of property-casualty insurance agents critical of St. Paul Travelers' agreement last week to stop paying contingent compensation fees for agents and brokers.

St. Paul Traveler's action came as part of a $77 million settlement with three state attorneys general to settle charges of accounting fraud, bid-rigging and improper finite reinsurance dealings.

According to an assurance document filed with the agreement, St. Paul Travelers paid the contingent commissions to big brokers who were part of a system that steered customers to major insurers who paid the commissions and agreed to rig bids offered to customers.

But Len Brevik, executive vice president and chief executive officer of the National Association of Professional Insurance Agents, called the agreement "an assault on a system of compensation that is legal, honest and a mainstay of the American free enterprise system."

"Contingent compensation is not the problem; those who abuse the system are the problem," said Mr. Brevik. PIA, he continued, "condemns illegal actions such as bid-rigging whenever and wherever they occur. Those who violate the law must be punished."

Regrettably, he added, "this settlement agreement attempts to paint all producers and carriers with an assumption that everyone in the insurance industry who receives performance-based compensation is violating the law. This is clearly not the case."

Rather than concentrating on those who allegedly committed abuses, language in the settlement agreement lumps "tens of thousands of smaller brokers and independent agents" in with firms that have signed such settlements, he said.

"To cast suspicion by encouraging a perception of guilt by association is patently unfair to the overwhelming majority of Main Street insurance agents across the country who have never engaged in any wrongdoing," Mr. Brevik said.

He added that the effort to abolish incentive compensation throughout the insurance industry "punishes the honest for the alleged abuses of a few" and does not acknowledge the many benefits that incentive compensation brings to the insurance marketplace, as it does to our entire American economy.

One of the Independent Insurance Agents and Brokers of America's chapters, the Independent Insurance Agents of Texas, also spoke out against the company's actions, echoing Mr. Brevik's sentiments.

"Honest agents who are following the law and producing profitable business for their companies should not be punished for the sins of the few," said Robert Hempkins, president elect of the IIAT. "Yet, insurance companies continue to buckle under to the bullying tactics of a handful of ambitious politicians. It is time for agents to speak up and voice their objection to these attacks."

Earlier, the Independent Insurance Agents and Brokers of America and Western Insurance Agents Association attacked the settlement, with Michael D'Arelli, vice president of legislative and regulatory affairs for the WIA, contending that the decision of St. Paul Travelers to sign such agreements with state attorneys general constituted "throwing producers under the bus."

The St. Paul Travelers settlement included the attorneys general of New York, Connecticut and Illinois, as well as the New York State Department of Insurance.

The agreement resolved issues relating to industrywide investigations by attorneys general into producer compensation, insurance placement practices and "nontraditional" or finite insurance products.

St. Paul Travelers publicly apologized for its conduct, but did not admit to any violation of federal or state law as part of the settlement. The agreement is similar to those entered into by three other insurers.

The arrangement calls for the insurer to discontinue paying contingent commissions on excess casualty coverage through 2008; discontinue paying contingent commissions on any line of business if 65 percent of the U.S. market for that line does not do so or signs an agreement not to do so; and agree to support legislation and regulations to abolish contingent commissions for insurance products or lines.

St. Paul Travelers agreed to pay $40 million in fines and penalties and $37 million to reimburse policyholders.

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