Neal Wolin, President and COO, Property and Casualty Operations, for The Hartford called PIA Executive Vice President & CEO Len Brevik on Monday July 23 to provide PIA with an advance briefing regarding a settlement agreement The Hartford has entered into.

The Hartford announced the settlement today with the Attorneys General of New York, Connecticut, and Illinois, resolving matters related to their investigations of the compensation arrangements between The Hartford and its independent property-casualty agents and brokers.

As part of the deal, The Hartford will no longer pay its property-casualty insurance agents commissions that are contingent upon growth or future performance, but will implement a new supplemental payment scheme with fixed commissions per policy based more on an agency's past performance with the insurer. The Hartford also agreed that it will forego paying contingent compensation in any line of its property-casualty business in which more than 65% of the U.S. market does not pay contingent compensation.

The Hartford has decided to launch for 2008 a new supplemental commission program in their personal and standard commercial insurance lines. Neal Wolin shared with PIA a memo that was being sent Monday to all agents & brokers.

“Under this new program, qualifying agents and brokers will earn a supplemental commission percentage based on their past performance, which will be earned on business written starting January 1, 2008,” the memo states. “This program will allow us to set the total amount of commission you will be paid for a particular insurance policy prior to the sale of that policy. The supplemental commission earned will be paid separately from base commission. During the third quarter of this year, we will communicate more information about our supplemental commission program that will be used to calculate your commission factors for business written with us in 2008.”

“You can be assured that all 2007 contingent compensation arrangements will be honored and that payments will be made in the usual time and manner,” the memo states. “We expect the total compensation paid to agents and brokers as a group overall under our new supplemental commission program will be greater than the total amount paid under our former program.”

What It Means to Agents:  Hartford is one the carriers that was subject to the settlement process in New York, Connecticut and Illinois. Connecticut Attorney General Richard Blumenthal has made clear that his goal is to eliminate contingency earnings from the insurance business countrywide. PIA National is reviewing the details of the 2008 compensation plan announced by The Hartford, which the company is still working out, and continuing our discussions with company officials.

The Hartford’s press release (7/23/07)

The Hartford Settlement with AGs Ends Agents' Contingent Commissions

July 25, 2007