Eperts See No More Changes In Comp Rules

In addition, he said, bid-rigging by major brokers being prosecuted by New York Attorney General Eliot Spitzer were illegal per se, and prosecution of such wrongdoing therefore did not require new laws.

Members of the panel did not seem to feel Spitzer’s investigations, in which he has been joined by state officials in California and Connecticut, would bring about major changes in industry producer practices.

However, the New York Attorney General has reached legal agreements with large brokers for changes in disclosure and other practices. The brokers also paid fines to the state and agreed to compensate customers. Spitzer has also been successful in persuading industry leaders Marsh, Aon and the Willis Group to eliminate contingent commissions.

One panel member said, “The issue is fading away into the sunset.”

J. Bruce Ferguson, ACLI’s senior vice president, state relations, said “some of the dire predictions” associated with the Spitzer probe, including claims of “widespread corruption” by insurance producers, “have not come true.” But he did say the changes to the Model Act approved by the NAIC as a result of the Spitzer probe “are designed to bring transparency to the broker compensation process.”

Referring to Spitzer’s job title, Poolman observed, “AG also stands for aspiring governor.” Moreover, he said, in his state, “you start banning contingency commissions, and some of the smaller rural agencies will go out of business, and the existing producer distribution system dries up.”