Vinck Ready To Pilot RIMS

"The job of president is to do what you can to continue to grow RIMS as an organization and provide value to our members," she said. "The biggest leap we made was a few years ago when the board made a decision to invest a few million dollars in our Web site"www.RIMS.orgwhich, she noted, "paid itself back tenfold."

Ms. Vinck said the annual conference continues to grow, noting that last years attendance topped 10,000. "At a time when we hear from so many other associations that are losing members, RIMS is gaining members and continuing to gain strength."

RIMS has also seen increasing interest in its Fellow designation, noting that professional development courses tied to the program are often sold out. About 150 people have received the "RF" designation.

A new conceptsymposiumsalso has been implemented. The first one, last year in London, was designed to teach risk managers about the London market. "They were able to tour Lloyds and speak to underwriters and brokers," she said. "They now understand why they need a London broker." This years symposium, tentatively set for November, will take place in Bermuda and will educate risk managers on the captive market.

Flag: Top Challenge

Brokers Need To Restore Trust

Vinck says most buyers feel disappointed and let down

By Caroline McDonald

Re-establishing trust between risk managers and their brokers is the number one challenge facing the risk management community in the wake of widening investigations into misbehavior by intermediaries and major carriers, according to Ellen Vinck, incoming president of the Risk and Insurance Management Society.

The issue is "the toughest that has hit our industry, ever," said Ms. Vinck, whose full-time job is vice president of risk management and benefits for United States Marine Repair Inc. "This has to deal with credibility and integrity and trust."

She added that most risk managers feel "truly disappointed and let down" by the incidents of bid-rigging and incentive fee abuse exposed by New York Attorney General Eliot Spitzer and other law enforcement agents. Some buyers, she added, are outraged by the scope of the problem, "because when everything started to happen we kept hearing it was an isolated case."

While bid-rigging might in fact be the exception rather than the rule in doing business with brokers and carriers, she cited a more common concern?"the stretching of conflict of interest to what I would consider not only bad business practice but probably non-competitive business practice. That is illegal. The breadth of that is getting larger, and I think we haven?t seen the end of it."

Although Ms. Vinck said she has a "great relationship" with her broker, she added that insurance buyers are "seeing so much of this that we are disappointed in the industry as a whole."

What?s more, she said, the many brokers doing a good job have had a "great disservice" done to them by their less ethical colleagues.

However, she emphasized that the issue of conflicts of interest is not new to risk managers, who have complained over the years to deaf ears.

"Regulators didn?t care," she said. "Now all of a sudden you get somebody like [Eliot] Spitzer in there. He hasn?t uncovered anything that wasn?t common practice and accepted practice. Everybody knew about contingent commissions?there?s nothing illegal about them. Is it a conflict of interest? Probably."

Risk managers, however, are not off the hook, she added. Even though many complained about the issue, she said some blame has to be placed on buyers for accepting the status quo.

"They accepted it because that was the protocol," she said. "It wasn?t hidden?everybody knew it. We were supposed to make sure our brokers were disclosing to us. The problem was our brokers didn?t disclose to us and the risk managers didn?t scream loud enough?and shame on us."

Her biggest question, she said, is if the carriers were paying the brokers, "how come the carriers are all silent? How come they haven?t been dragged through the mud on this? They?re the ones who instigated the whole thing. That?s my primary source of frustration."

Ms. Vinck said she believes brokers should only be paid by the insured, emphasizing: "I have no problem compensating my broker."

On renewal, she anticipates a few changes. "I expect a refund," she said, adding that she has no problem "taking that bucket of money and paying my broker more, if I feel my broker deserves it."

In the future, she said, "I see tremendous change in the relationships within this triangle?the broker, insured and underwriter?I see it changing for the better."

Brokers and carriers, however, have a "huge job" ahead when it comes to rebuilding relationships, she warned.

"We should be looking at the entire model of how we do everything in a different way," she said. "But whatever it took to get this out is fine with me. We will be better as an industry going forward."

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.