During a speech at the Independent Insurance Agents & Brokers of America's Legislative Conference and Convention late last month, IIABA President Alex Soto defended incentive compensation and profit-sharing arrangements.
“Incentive compensation is proper, is legal, and it is used in every facet of commerce in the United States rewarding excellence,” he said. “It is part of an American tradition.”
The incentives, he said, help both customers and companies reduce risk exposures and underwrite those exposures properly, and help companies make a profit on underwriting risks.
Mr. Soto went on to say that he had no problem with sharing information about his compensation with clients, but felt the drive by some companies to disclose the information was going to the extreme.
He said if companies wish to disclose compensation information, they should also disclose how much of the premium dollar is spent on the carrier's business, including a breakdown of executives' compensation.
“In that context, include in a generic sense what we get paid,” said Mr. Soto. “The fact of the matter is, that's a whole bunch of hooey,” he said, referring to the entire concept of disclosure.
He said what clients are interested in is the bottom line–cost, the quality of the carrier and the service they receive.
If the customer does not like the result, he continued, they can go to another agent.
“You and I have to be the best we can be every day in order to retain our clients,” he said.
“Incentive compensation is proper, is legal, and it is used in every facet of commerce in the United States rewarding excellence. It is part of an American tradition.”
Alex Soto, President, IIABA
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