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Statement by PIA National in Response to 1/26/05 Study by Consumer Federation of America (CFA)

The National Association of Professional Insurance Agents (PIA National) has released the following comments in response to the 1/26/05 study and press release issued by...
January 27, 2005

The National Association of Professional Insurance Agents (PIA National) has released the following comments in response to the 1/26/05 study and press release issued by the Consumer Federation of America (CFA):

There is nothing new or valid in this so-called "study." It is just another collection of one man's opinions, those of J. Robert Hunter, CFA's Director of Insurance. As an American, Mr. Hunter is entitled to his opinions, and he is also entitled to be wrong as often as he desires.  He is wrong once again.

Mr. Hunter has been a consistent critic of the insurance industry. He continues this tradition by again trying to turn the choice that independent agents offer into a "conflict." This is a disservice to consumers.  He also questions the integrity of independent insurance agents and the agency distribution system generally, based on opinion and not fact.

This latest "study" and press release simply attempts to repackage Mr. Hunter's Senate testimony of November 2004, which was already outrageous, by making it more so. At that time, PIA publicly admonished Mr. Hunter for saying that independent insurance agents receive "kickbacks." Once again, PIA must point out that an incentive bonus that rewards agents for helping their clients reduce risk and suffer fewer losses is not a "kickback."  Kickbacks are illegal.  But again, Mr. Hunter persists in calling legal commission compensation "kickbacks." Repeating something that is not true does not make it so.

To suggest that bonuses agents can receive provide an incentive to delay filing legitimate claims, or to 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, and to suggest otherwise is just plain wrong.

We note that this study says that "Profit-related commissions are of even greater concern, as they may entice agents or brokers to delay or discourage legitimate claims."  When are commissions not "profit-related"?

It is apparent from this report that Mr. Hunter has little confidence in the abilities of the consumers for whom he purports to advocate.  He seems to think that most consumers are people of diminished capacity who can't handle too many choices in the marketplace, or who have exposures needing a one-size-fits-all approach.  This report refers in a condescending manner to "unsophisticated individual and small business buyers," and it also criticizes contingency commissions paid by carriers -- all in an apparent attempt to build a case for doing business with direct writers and captive agents who offer limited choices. 

Mr. Hunter continues to play fast and loose with the English language in his apparent attempt to convince consumers that they would somehow be better off with less choice in insurance products, rather than more choice.

While some people may prefer a socialist system of insurance, PIA strongly supports the broad range of choices consumers enjoy as a result of the American Free Enterprise System.

Len Brevik
Executive Vice President & CEO
PIA National

CFA's Press Release (1/26/05)

PIA National Admonishes CFA's Hunter for Remarks During Senate Testimony (11/18/04)