New rules.Travelers and Chubb--who both have said they'd they'd 1. Contraction of they had. 2. Contraction of they would. they'd have ~would give up contingent commissions--have unveiled new compensation schemes designed to reward brokers for their performance without creating a potential conflict of interest with clients. Both plans are designed to pay agents about the same as they would have received in the past through contingent commissions Contingent commissions is a term used in the American insurance industry for any kind of broker's commission which is contingent upon some event occurring (instead of a commission paid on the sale itself). In the UK this form of payment is known as Overriders. , but would be based on a broker's past performance, instead of future business produced, said Robert Rusbuldt, chief executive officer of the Independent Insurance Agents and Brokers of America. "Travelers and Chubb agents have had positive comments on the new program," Rusbuldt said. "They should be commended for handling this very well in keeping their independent agency force well informed. Everybody is engaging in a new path here, both the companies and their distribution forces. Communication is key and education is important." Brian MacLean, chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. of Travelers, said the company had spoken to more than 1,000 agents to date, and the feedback has been very positive. "What we've done is left the base commission alone, but changed the additional amount to a fixed percentage, based on historical performance. Contingent commissions were contingent on Adj. 1. contingent on - determined by conditions or circumstances that follow; "arms sales contingent on the approval of congress" contingent upon, dependant on, dependant upon, dependent on, dependent upon, depending on, contingent the business the broker produced in the future, and inherently not discloseable to the customer. This is something that is Fixed, not predicated on future actions, and fully discloseable to the customer at the time of sale" MacLean said. "We think we've come up with a structure that will address the issues that the regulators have brought up and at the same time, offer brokers and agents a compensation structure that keeps them economically whole," MacLean said. The new program has been well received by brokers smaller than the Big Four. "What Travelers and Chubb have done is innovate in·no·vate v. in·no·vat·ed, in·no·vat·ing, in·no·vates v.tr. To begin or introduce (something new) for or as if for the first time. v.intr. To begin or introduce something new. compensation," said Ken A. Crerar, president of the Council of Insurance Agents and Brokers. Travelers and Chubb "have eliminated the argument that we never bought, that an agent can look at this and say, 'if we reach these benchmarks, we will get extra money at the end of the year," said Alex Soto, president of Insource Inc., a brokerage with a staff of 60 in Miami. "Now they tell you at the beginning of the year what they are going to pay you. There's no incentive to try to manipulate manipulate To cause a security to sell at an artificial price. Although investment bankers are permitted to manipulate temporarily the stock they underwrite, most other forms of manipulation are illegal. business." It should be interesting to see how the Big Four respond. Willis Wil·lis , Thomas 1621-1675. English anatomist and physician known for his studies of the nervous system and the brain. He discovered the circle of Willis at the base of the brain. Group said in a statement that it "is actively reviewing with our clients, carrier partners and the regulatory agencies regulatory agency Independent government commission charged by the legislature with setting and enforcing standards for specific industries in the private sector. The concept was invented by the U.S. , the supplemental compensation arrangements that are currently being proposed in the marketplace by certain carriers. After our preliminary review, it is unclear whether these proposals create perceived conflicts, similar to those created by contingent commissions. In 2004, we were the first industry participant to disavow TO DISAVOW. To deny the authority by which an agent pretends to have acted as when he has exceeded the bounds of his authority. 2. It is the duty of the principal to fulfill the contracts which have been entered into by his authorized agent; and when an agent contingent commissions--paid on similar parameters--not because we had to but because we wanted to as it was the right thing to do." Also in a statement, Aon said: "We are taking it under consideration. Aon hasn't yet been presented with any formal plans from any carriers. Once we are given the facts, we will review and decide." |
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