The recent broker compensation investigations may have given local and regional benefits brokers help in competing with the big, national brokers in the group disability insurance market.

That’s the picture that emerged here during sessions at the 13th annual disability insurance seminar organized by JHA, Portland, Maine.

Drew King, president of JHA, a disability risk management and consulting unit of General Re Corp., Stamford, Conn., started the seminar by putting distribution–especially distribution aimed at employers with fewer than 100 covered employees–on his list of top 10 predictions for 2006.

Instead of focusing solely on sales, “we’re going to start talking about how good was the business that we wrote,” King said.

JHA executives have been speaking for years about the importance of keeping carefully underwritten, properly priced group disability accounts on the books.

Disability insurance executives argue that rate comparisons can be misleading in the disability insurance market, because subtle differences in contracts can lead to wide variations in policy performance.

This year the biggest brokers seem to be looking mainly at price, especially for small and midsize employers, but smaller brokers seem to be more interested in using good service and new services to set themselves apart from competitors, according to Len Cavallaro, senior vice president of sales and marketing at Jefferson Pilot Financial, Greensboro, N.C., a unit of Jefferson-Pilot Corp.

Cavallaro, who spoke at a session on the effects of New York and California regulators’ investigations of broker compensation arrangements, noted that the investigations focused mainly on the biggest brokers.

Regulators sent the message that a broker’s process for screening carriers ought to be “transparent,” or readily understandable to clients, and the biggest brokers now seem to assume the easiest way to be transparent is to recommend the disability coverage with the lowest price, Cavallaro said.

Meanwhile, “the research keeps telling us brokers are important,” Cavallaro said. “People need someone to help them sort it all out.”

Because of the broker comp investigations, many giant brokers are swearing off “contingent commissions,” or commissions that reward them for the performance of entire blocks of business, as opposed to individual cases.

At the giant brokers, the attitude is: “Contingent comp is morally wrong, because we can’t collect it,” Cavallaro joked.

Smaller brokers still are collecting contingent commissions and other types of compensation from carriers, and they seem to be interested in finding ways to disclose that compensation and show clients the carrier compensation adds value for the clients, Cavallaro said.

Today, at the local and regional level, “brokers don’t want to be a commodity,” Cavallaro said.

Cavallaro said that shift seems to be increasing brokers’ interest in training services and other support services from insurers.