Buyers Be Where?
By Andrew G. Simpson, Jr.
January 24, 2005
The Insurance Journal
Where are all the buyers?
Regulators and other officials note that the voices of insurance buyers are conspicuously absent from the current controversy over brokerage compensation. They say that few if any risk managers or buyers of insurance have come forward with complaints or specific instances where they were harmed. The Risk and Insurance Management Society has said it supports disclosure of all compensation but that's about it. This "conspiracy of silence," as some have dubbed it, has apparently hindered state regulators' ability to get at the problem.
But is the silence of buyers really all that surprising? Do officials honestly expect some risk manager or other commercial executive to step forward and publicly admit, "Yeah, I was duped. I didn't pay attention. I didn't have a clue what was going on with our insurance."
It appears that commercial buyers relied upon their brokers, perhaps in some cases to a fault. How deeply these buyers will trust their brokers in the future remains to be seen. While there have been personnel ramifications of the scandal, it is not yet clear that much business is moving.
Of course, it would be helpful if more buyers came forward. They could supply facts to gauge the depth of the problem and help weed out those individuals responsible for any wrongdoing. Also, their silence leaves too much room for harmful rumors, as well as knee-jerk business and political reactions.
Perhaps, just perhaps, there have not been many buyers speaking out because there are not all that many buyers who believe they were duped. Critics should at least consider this may be the case.
Or perhaps, just perhaps, buyers believe that their viewpoints are being heard, through the thousands of brokers and agents who are not involved in the allegations of wrongdoing but who are trying to do the right thing and resolve the issue.
Policymakers may be understandably reluctant to take the advice of brokers and agents whom they perceive to be in the center of the controversy. Because of the actions of some, the trust of public officials as well as that of the buying public in all agents and brokers is strained. Most outside the industry do not distinguish between big and small brokers, personal and commercial brokers, or even property/casualty and life/health agents.
The hope is that enough of those same people who now only see conflict of interest, bid rigging and account steering will be brought around to again see that the vast majority of agents and brokers can in fact be trusted to represent the best interests of buyers ahead of their own self-interest, in the realm of public policy as well as in everyday business.