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PIA National Admonishes CFA's Hunter for Remarks During Senate Testimony

WASHINGTON, November 18, 2004 - The National Association of Professional Insurance Agents (PIA) today admonished the insurance director of the Consumer Federation of...
November 18, 2004

WASHINGTON, November 18, 2004  - The National Association of Professional Insurance Agents (PIA) today admonished the insurance director of the Consumer Federation of America (CFA) for statements made during Senate testimony this week.

In testimony Tuesday November 16 before a subcommittee of the Senate Committee on Governmental Affairs, CFA director of insurance J. Robert Hunter described year-end bonuses agents can receive, which are calculated in part on the lower loss ratios, as "kickbacks" from insurance companies, and suggested that efforts to reduce losses provided an "obvious incentive for an agent to delay filing a legitimate claim or to improperly advise a consumer not to file it."

"Mr. Hunter's congressional remarks are outrageous and not constructive, other than to grab headlines," said PIA National Executive Vice President and CEO Len Brevik. "Mr. Hunter has been a consistent critic of the insurance industry. He continues this tradition by turning the choice independent agents offer into a 'conflict.' This is a disservice to consumers."

"An incentive bonus that rewards agents for helping their clients reduce risk and suffer fewer losses is not a 'kickback.' Brevik said. "Kickbacks are illegal. To suggest that such bonuses provide an incentive for independent agents to delay filing legitimate claims, or advise their clients not to file legitimate claims, is to presume that agents lack integrity and do not comply with insurance law.  This is not the case.  Independent agents adhere with integrity to both the spirit and standard of the law. To suggest otherwise is just plain wrong."

Brevik added that not only did Hunter cast aspersions on agents during his testimony; he also accused the entire insurance industry of having an "anti-competitive culture" and blasted state insurance regulators for allegedly failing to protect consumers.

"The idea that the insurance industry is not competitive, as a regular business practice, is absurd," Brevik said. "Our industry is perhaps one of the most competitive in our economy. And the idea that state insurance regulators have 'utterly failed' to protect consumers is also incorrect.  It was state regulators and enforcement officials who brought the allegations against Marsh.  Previous investigations involving the securities industry and savings and loans began on the state level.  In the war against fraud and abuse, state authorities are our nation's first responders and they do an excellent job."

Founded in 1931, PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance, but specialize in coverage of automobiles, homes and businesses. Visit PIA at www.PIANET.com.