Choose the month of the 2013 archive you would like to browse from the links below. You can choose other years to browse from the menu on the left.

Brokers reject insurers alternative to MSAs

Proposals from US insurers to replace contingent commissions with alternative payment structures have been rejected by brokers. A number of large US insurance companies recently proposed compensating brokers according to factors such as their ability to perform difficult acts of physical dexterity or repeat tongue twisters to underwriters.

Unlike contingent commissions, these supplemental commissions would provide brokers with a fixed fee based only on the broker being able to complete the party tricks.

Brokers unhappy at
party tricks requirement

The insurers’ proposals have been reviewed by various state attorneys general and have been found not to represent contingent commissions as defined in the insurers’ settlements over alleged wrong doing.

But brokers have said that they would not accept supplemental commissions that were contingent on them performing juggling acts or walking on their hands in front of underwriters. “We feel that these commission arrangements are more appropriate for agency relationships,” a spokesman for one of the leading broking houses told RISKbitz. “Also, there is the suspicion that insurers are basically having a laugh at our expense.”

But insurers were insistent that their intentions are genuine. “Brokers bring a lot to our business, not least of which is premium volume,” said Billy Joe Burgerking III, chief executive of Allfarms Insurance. “But they can add value too and we want to reward them for that.”

Mr Burgerking III said that when brokers performed a magic card trick for underwriters or told a joke, it cheered everyone up and productivity increased. “Bringing in choice accounts at top price is one thing – but there are other ways of putting a smile on our people’s faces too,” Mr Burgerking III said.