Eliot Spitzer's star has risen and set, but his legacy lives on, at least when it comes to the issue of contingent commissions in the insurance industry.

This week, New York Insurance Superintendent Eric Dinallo and AG Andrew Cuomo started hearings in Buffalo on broker compensation, with two more hearings scheduled for later this month in Albany and Manhattan.

First out of the box to testify was Willis CEO Don Bailey, who stated that contingent commissions should be gradually phased out, with full transparency mandated for all insurance brokers.

Back in the day, agents and brokers relied on contingent commissions as a way to bolster revenue losses after carriers cut regular commissions because of inflation. Over the years, though, contingent commissions have developed an unsavory reputation because of the unfortunate misconduct of the sneaky and the greedy.

Insurers have defended the practice, saying that everyone in any form of sales is entitled to some form of commissions, and that the practice is ethical as long as the buyer is informed of the arrangement and that transparency is maintained. In a lot of cases, compliance involved a lot of voluminous paperwork and red tape, for both the carrier and the producer.

The question remains, what does all this mean to the actual insurance customer? Some say that insureds aren't aware of the arrangement or if they are, really don't care all that much, as long as they get the coverage they need at a fair and competitive price.

I'd like to throw the question out to AAB readers: What's been your experience with coaching your customers about the contingent commission issue — and do they care? And how much of a hit will your agency revenues take if they're phased out entirely?

Please feel free to share your thoughts!

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