Behind Closed Doors

Behind Closed Doors

Despite preaching the need for disclosure and transparency in broker compensation, the Risk and Insurance Management Society last week banned the press from covering a morning-long session on the contingency fee scandal at its annual conference.

To help its members cope with the new emphasis on accountability and make sense of whatever information might be disclosed, RIMS devoted a two-part, three-hour session to “Broker Contingency Fees, What You Should Know.” A panel of experts, RIMS said, would “review types and amounts of contingency fees involved in placement service agreements” as well as “examine insightful legal and ethical issues in evaluating broker services.”

The panel was scheduled to include a risk manager,a RIMS official, a Marsh representative and a regulator from the New York Insurance Department.

The RIMS conference was dominated by talk of the controversy. There was a keynote address by Willis Chairman Joe Plumeri, in which he called for the abolishment of contingency fees. There was a luncheon face-off with two leading RIMS officials taking the heads of Aon and Marsh to task. There was even a seminar about whether to opt-in or pass on Marshs $850 million settlement offer. Yet no press was allowed at the one nuts-and-bolts session offering practical advice on how risk managers can survive this debacle.

RIMS declined to rescind its decision to ban the press fromthis critical event, despite an extraordinary joint appeal from National Underwriter and two of our chief competitors for risk management readership.

“We appreciate the interest of the media in attending RIMS 2005 in Philadelphia,” said RIMS President Nancy Chambers, in an e-mail response to NU'srequest for access. “The mission of RIMS is to provide educational opportunities and respond to the needs of our members. With the current focus on contingency fees, the conference is offering a number of sessions as well as a keynote panel on this topic. The sessions range from 'open sessions,' to 'risk manager attendees only,' as determined by the session coordinators in consultation with the speakers. Our members sometimes request a session be closed.”

In my e-mail response, I told Ms. Chambers that I frankly failed to see the wisdom of closing any contingency fee sessions to the press. If RIMS' mission is indeed to provide educational opportunities, how could the organization have passed up the chance to get the word out to thousands of risk managers unable to attend the conference or those particular sessions?

Also, at a time when RIMS is reemphasizing the need for complete transparency and full disclosure, it defeated the purpose to hold a session on such issues behind closed doors. It was ironic at best and hypocritical at worst.

This was a very unfortunate decision on the part of RIMS. Now that disclosure is going to be the rule rather than the exception, look for brokers to bombard their clients with complex explanations of how they get paid. Will risk managers be able to make heads or tails of the information and have the understanding to come to an informed judgment about what to do?

If I were RIMS, I would not only have invited the press to those sessions, I would have broadcast them over the Web so that all risk managers could have access. That way, the RIMS sessions might have helped thousands of risk managers get a better handle on this crisis, rather than share the panelists wisdom and insights with only the relatively few buyers lucky enough to be in the room in Philadelphia that day.

Sam Friedman

Editor-In-Chief

Reproduced from National Underwriter Edition, April 15, 2005. Copyright 2005 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.