In a speech January 31 at the National Press Club in Washington, D.C., New York Attorney General Eliot Spitzer declined to endorse an industry-wide ban on contingent commissions in the insurance industry. In response to a question, Spitzer said “I don't want to say that they [contingent commissions] should be banned industry wide.” Spitzer said “the way they were used by Marsh and others” was not appropriate and Marsh banning them was “the right thing to do.” He added that “in other parts of the industry, they may be appropriate.”
 
“PIA is encouraged that New York Attorney General Eliot Spitzer made this important distinction,” said PIA National executive vice president and CEO Len Brevik. “From the outset of Mr. Spitzer's investigations, PIA has stated that contingency agreements themselves are not the problem, documented abuses of them by corporate entities are.”
 
What It Means to Agents: Mr. Spitzer agrees with the point that PIA National has been stressing since this issue came to the forefront. In his brief discussion, Mr. Spitzer made clear that contingency earnings as a method of compensation are not per se illegal or unethical. Spitzer’s comments are a direct recognition of what PIA National said from day one in our public comments about this issue. In addition, our take is that his remarks call into question the NAIC’s reasoning for their disclosure model affecting all insurance brokered transactions, including residual market placements.
 
PIA National Encouraged by Spitzer Remarks on Contingent Commissions (1/31/05)

February 1, 2005