Boston-based Liberty Mutual should be congratulated for its continuing legal battle over insurance broker contingent commission fees, an agents group said.
The insurer recently secured a ruling from the New York Appellate Division Court in Manhattan that threw out part of a suit stemming from the broker contingent commission fee scandal.
The DeWitt, N.Y.-based Independent Insurance Agents & Brokers of New York Inc. congratulated the insurer "for its conviction and perseverance in dealing with the legal action taken against it by the New York State Attorney General's Office."
"While other carriers were reaching compromise agreements with the AG's Office related to charges of bid-rigging and misconduct related to the payment of contingency commissions, Liberty Mutual chose to stand up and fight," the statement said.
The appeals court ruled last week that the insurer could not be held responsible for failing to disclose payment of contingent commissions to brokers. However, the court did uphold the portion of the suit dealing with charges of bid-rigging.
In its ruling the court dismissed those sections of the case dealing with the payment of contingent commissions, saying the payments "are not illegal" and the insurer was under no obligation to reveal those payments because "no special relationship" existed between the parties.
However, the court did rule that the Attorney General's Office has the authority to pursue charges of bid-rigging, saying the office has an "interest in securing an honest marketplace for all consumers."
IIABNY said Liberty Mutual was correct in standing up and fighting the suit "on a long-standing and legitimate method of compensating agents and brokers."
"The agent and broker community owes a debt of gratitude to Liberty Mutual for its conviction in the face of so many other major carriers who chose to settle without a fight and now can no longer pay contingent commissions."
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