NU Online News Service, July 19 , 3:40 p.m. EDT

Joe Plumeri, head of Willis Group Holdings, went beyond blasting the potential conflicts for brokers accepting contingency fees to urge buyers to ask who "independent" agents actually work for in an opinion column in this week's National Underwriter.

Mr. Plumeri, chairman and chief executive officer of Willis, wrote in the July 19 "Final Say" that "whether you're a big global broker like Willis or a local insurance agency...you can only serve one master. It's either the carrier or the client. You can't work for both."

Mr. Plumeri wrote that those who accept volume-based contingent bonuses might be tempted to compromise their primary duty to place a client's business with the best company for the best terms and price, while profitability-based fee deals create a disincentive to provide aggressive claims service.

"Willis, unlike most retail brokers and agents, has planted its flag firmly on the side of its clients. That means not taking bonuses from insurance companies that would put us at odds with our clients' best interests," he wrote.

Addressing a more fundamental issue, he added that when doing business with an agent, buyers should be aware that "they are dealing with a sales representative of the insurance company. There is nothing 'independent' about an independent agent. They work for the carrier, not the customer."

He also wrote that since "some agents count on these [contingent] payments for, maybe, 100 percent of their annual profits...those who buy coverage through an agent should know those agents aren't obligated to get them the best price, terms and conditions, or fight for them when they have a claim. No amount of compensation disclosure will change that fact."

To read Mr. Plumeri's complete column, go to http://www.property-casualty.com/Issues/2010/July-19-2010/Pages/Who-Do-Your-Brokers.aspx.

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Plumeri: Who Do Agents & Brokers Really Work For?

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