What Do Readers Say?
Recent editorials on the fallout from bid-rigging and market manipulation charges leveled by New York Attorney General Eliot Spitzer prompted readers to e-mail their take on the scandal.
Understandably, given the sensitivity and controversy surrounding Mr. Spitzers allegations, as well as the market power of those on the hot seat, none wanted their names or affiliations revealed for fear of retaliation from their employers, brokers or carriers, but all gave permission to share their views anonymously.
One agent wrote in response to my Nov. 15 column"Where Is The Outrage?"which hammered risk managers and their national association for failing to speak out more forcefully about the allegations. "I agree that there should be outrage from risk managers," the agent wrote, "but to answer your question as to why there is not much outrageto me, it is obvious."
"Consider that risk managers are not spending their own [money]," the agent wrote. "I worked for a national broker years ago, and now I am part owner of an independent agency. Our customers are, for the most part, business owners, and these people demand and get accountability from independent agents. It's their [money] on the line."
This agent cited "a simple truthif you are willing to lose [money], then trust its allocation to others who have little if any stake in how it is spent. This is simply a product of a management system that does not adequately hold the risk management and financial people accountable."
A second producer with a specialty agency responded: "I dont believe theres any need for outrage. This is a good time for insureds to learn that meaningful competitive bids need to be from competing insurance agents (or brokers)."
This agent tried to explain the misdeeds cited by Mr. Spitzer: "Some insurance sales peoplegot carried away, probably without the slightest inkling that it could come to this. The very notoriety of this situation will be sufficient to stamp out bid-rigging for a long time to come without any further action from anyone."
The agent added, confidently: "I dont think bid-rigging will be found to be endemic among the huge agencies, and its only the huge agencies that have the clout to pull something like this off. Most of all, just because Mr. Spitzer was investigating contingency income doesnt mean that the bid-rigging he discovered has anything to do with contingency income. Bid-rigging has to do with stifling legitimate competition."
Referring to rampant press speculation that Mr. Spitzer is determined to run for governor of New York in 2006, this agent concluded: "As long as were focused on conflicts of interest, I cant help wondering whether Mr. Spitzers actions are motivated solely by the pursuit of justice, which is his only legitimate mandate, rather than personal aggrandizement and ambition."
As for earlier editorials questioning whether the Spitzer probe might force the industry to permanently do away with the contingency fee deals that drove much of the bad behaviorat least for mega-brokers and their jumbo commercial clientsone agent wrote: "Thanks for being a leader. I agree with your conclusion that once sprayed by a skunk of this potency, no amount of perfume is going to make the industry smell better."
However, this agent also expressed concern about regulatory overreaction: "The most troubling aspect of all of this is that this type of scandal can lead to extreme new lawssort of like a doctor reacting to a patient's bloody nose by putting a tourniquet around his neck."
Sam Friedman
Editor-In-Chief
Reproduced from National Underwriter Edition, November 23, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.