I never thought of myself as a party pooper, but that's how I felt after the hammering I took over my Oct. 20 column and earlier blog posting, in which I not only slammed AIG for taking top producers on junkets right after getting a federal bailout, but challenged agent acceptance of such incentive compensation on principle.

I suggested that taking agents to posh locales creates a potential conflict of interest, tempting supposedly independent producers to place business with a particular carrier because they might win a fancy trip, rather than serve the client's best interest.

At the very least, I said agents should disclose such side rewards to buyers–much like my call earlier this year for doctors to tell patients whether a particular pharmaceutical firm had flown them to a tropical resort to learn all about the wonder drugs they were prescribing.

The backlash was severe. While I had a few supporters, most of the comments to my Oct. 10 and Nov. 3 blog entries–taking agents to task for partying on their insurer's dime–blasted my “holier than thou” attitude.

Allow me to summarize the assertions readers made to defend the use of junkets as bonus compensation for producers:

o Everybody does it. In fact, one reader suggested that if AIG is forced by public pressure or government fiat to stop its incentive travel program, it will lose business, thus undermining the company's financial health and ability to repay its government loan. One regular blog reader, “Mikk,” lamented that “it's a marketing arms race out there, and you have to use every trick in the book, or lose.”

o There is no such thing as a free lunch. Indeed, noted one respondent, agents who receive lavish incentives should be paying taxes on the cash value of such trips.

o Nothing beats face time. Some argued they go to carrier retreats to get a chance to rub elbows with a company's top executives and raise the agency's visibility, thus improving their leverage with a carrier–which they use to negotiate better prices and terms for clients.

o Networking is the real bonus. A number of respondents cited the value of talking over market challenges with peers from other agencies–particularly in this age of electronic seclusion, when most prefer to stay in touch via their office computer and mobile devices rather than travel to a convention or seminar.

o Agents are different than brokers. A few noted that since even “independent” agents contractually represent specific carriers, their compensation–including incentive bonus trips–is built into the price of coverage and is none of the client's business. Those who advertise themselves as “brokers,” however, should represent (and be paid by) clients, and thus not accept any under-the-table deals to steer accounts to a particular insurer, most agreed.

o Junkets are the least troublesome agency conflict. A few readers warned that buyers should be far more concerned about how differences in commission rates impact an agent's placement decision.

o The free market's “invisible hand” protects consumers. Many who objected to my reasoning said it would be professional suicide if agents made a habit of placing clients with carriers that overcharged or provided poor service, because they would lose business to competitors.

These are all valid points, but one fundamental question remains unanswered: If these trips didn't succeed in convincing agents to steer accounts to a particular carrier, why do insurers lay out millions for such incentives?

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