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Let's Just Tell It Like It Is

In my previous career as a reporter and talk show host, I became very familiar with how the media can, and often do, distort...
March 15, 2005

An Out-of-Control Media Frenzy Can Do Great Harm

By Ted Besesparis
Vice President, Communications
PIA National

PIA National Senior Vice President of Communications Ted BesesparisIn my previous career as a reporter and talk show host, I became very familiar with how the media can, and often do, distort and sensationalize the news. Now that I work for honest people - PIA members - I am getting to see from the other side how a media frenzy can cast a shadow on those not involved in alleged wrongdoing.

As this is being written, we are in the midst of a flurry of activities sparked by the actions taken by New York State Attorney General Eliot Spitzer. His allegations of bid-rigging against a major mega-broker and the resulting settlement have prompted calls for action to strengthen broker disclosure of compensation.

On the public policy front, PIA National has been involved with PIA affiliates in an effort to try to make sure any reforms that may be adopted address the real problems at hand, and do not create more problems than they solve.

The problem is bad behavior by a few bad actors at Wall Street mega-brokerages. Of course, this point is constantly at risk of being lost in the dynamic that always develops whenever serious charges of wrongdoing are made. In this instance, there has been no shortage of misstatements about the nature of our business and how it really operates.

In such a highly-charged atmosphere, terms such as "scandal" and "widespread corruption" get thrown around with wreckless abandon, which runs the risk of unfairly tainting the reputations of honest people who possess the highest commitment to integrity - such as independent insurance agents. Ambitious officials and self-appointed consumer activists seize the opportunity to make names for themselves by chasing headlines and gravitating to television klieg lights, like moths to a flame.

Who can get hurt in this frenzy?  Those who are not engaged in wrongdoing, but unfairly get painted with a broad brush because they work in the same industry: the professional insurance agents who are honest, the carriers that engage in only ethical conduct, and clients who are confused by all the hype.

PIA is actively engaged in efforts to impress on both policymakers and the media the fact that getting paid a commission and being eligible to earn a performance bonus is neither anti-competitive nor anti-consumer.  Incentive-based compensation rewards productivity and encourages competition, and competition always benefits the consumer by providing more choices in the marketplace.

On the perception front, PIA had to publicly criticize consumer activist J. Robert Hunter for saying to Congress that bonuses based in part on lower loss ratios are "kickbacks" from insurance companies that provide an "obvious incentive for an agent to delay filing a legitimate claim or to improperly advise a consumer not to file it."  PIA also took Consumer Reports magazine to task for advising its readers that consumers who buy coverage directly from a carrier or an agent who works for one insurer such as State Farm "don't face the bid-rigging problem" - but offered no evidence that independent agents were involved in such a practice.

Those who make such outrageous and irresponsible statements must be called to account for them in the court of public opinion.  Or as the late Sen. Hubert Humphrey once said, "The right to be heard does not automatically include the right to be taken seriously."

The Spitzer investigations are also being used by advocates of a federal takeover of insurance regulation to press their point, ignoring the fact that Spitzer is a state official who used state law to bring his charges.

News reports in December that said Spitzer called for federal regulation of insurance were not accurate.  He made one ambivalent comment in an extensive news interview that was reported out of context.  Several days later Spitzer said to Congress, "I would strongly resist, and the states would fight, any attempt at preemption. While we would welcome cooperation, we would fight federalization."  Of course, no media outlet ran a correction.

One thing is certain: PIA will not stand idly by and allow our members' reputations to be tainted, their businesses placed at a disadvantage and their clients to be offered fewer choices as the result of incorrect perceptions.

As the late sportscaster Howard Cosell used to say, "Let's just tell it like it is."

Ted Besesparis tedbe@pianet.org is Vice President of Communications for PIA National.

PIA Connection

This article originally appeared in the March 2005 PIA Connection.