New York State Superintendent of Insurance Howard Mills defended contingent commissions and shared his views on a national disaster plan during the Professional Insurance Agents of New York State Inc.’s 14th annual Metropolitan Regional Awareness Program, Jan. 19 at the New York Marriott, Brooklyn, N.Y. Nearly 600 insurance professionals attended MetroRAP, the event’s largest crowd ever.

“Contingent commissions have been around for a very long time. They are legal,” Mills said, “And no one, even the attorney general, has ever said they are not.”

Mills’ speech, which started with comments about the turbulent year the industry experienced, drew applause at several points and described changes at the New York State Insurance Department resulting from the last year's events. “Agents play an integral role in society,” he said, and followed his praise with comments that contingent commissions are legal, and should not be attacked indiscriminately to capture headlines.

“The reckless use of semantics gave the industry a black eye,” he said, emphasizing that policymakers need to resist the temptation to overreact to the instances of bid rigging and steering uncovered at a few firms. “It does not serve the industry, nor the consumer.”

Mills reported that, in his Department’s view, it is the agents’ job to evaluate and help consumers make the best decision themselves in purchasing insurance. “Does disclosing ‘every single quote’ truly service the consumer? I believe you could argue no,” he said. “This can be a mind-numbing industry, and it would be a disservice if you went to that type of extreme form of disclosure.”

With regard to a natural catastrophe plan, Mills reported collaboration with his counterparts in California, Florida and Illinois to develop a “three-layered,” national plan, which would include tax incentives to allow for deductible contributions to augment what he called the industry's “tremendous” reserves, as well as a regional or state catastrophe plan modeled after California's; and lastly a federal backup.  

N.Y. Supt. Mills Defends Contingencies at PIA Event (Insurance Journal 1/23/06)

January 24, 2006