Scandal: Now What? Nothing!
By Cynthia Beisiegel
The Insurance Journal
June 20, 2005
When news of Eliot Spitzer's allegations against giant insurance broker Marsh & McLennan hit the press in October 2004, local agents and brokers braced themselves for an onslaught of client concerns. They prepared brochures, distributed talking points to agency staff, and waited for the phone to ring with calls from angry clients demanding explanations.
"When Spitzer's investigation hit the news, we prepared our agents with sample letters and sample press releases," said Jim Perucca, executive vice president of the Independent Insurance Agents of Oregon. "I think everybody was initially concerned about customers reacting to this news with pointed questions about commissions and agency compensation. What has happened? Nothing."
Mark Hagan of Elmira, N.Y.-based Perry & Carroll and chair of the board at the Independent Insurance Agents and Brokers of New York, echoed Perucca's sentiments. "Nada. There is not a single client who has come to us with any concerns or questions about compensation, bid-rigging, contingent payments--we have had no clients come forward and ask questions."
"We were prepared," he said. "Back in October, when news of Eliot Spitzer's allegations against Marsh came out, we prepared internally a sort of talking paper to give to all of our personnel to respond to questions if any client asked questions. And to my knowledge, we've never had to use it."
Across the country, agents consistently said that the scandal hasn't been an issue. In Florida, Alex Soto, vice president of the Independent Insurance Agents and Brokers of America, and president of Miami-based InSource Inc., said clients are worried about other issues: hurricanes, the cost of insurance and the availability of insurance--not the Marsh scandal. "It has really not been an issue. I have had only one client ask me what we earned on their policy. I answered the question and they were flabbergasted it was so little. No other questions about Marsh, Spitzer or the scandal have come up!"
The situation remains the same in Texas, said IIAT Executive Director David VanDelinder. "Literally, in every case, agents report to us that this is a non-issue with the customers. As a matter of fact, the average agent may have heard one or two customers over the last year or 18 months this has been going on who was even aware of what was happening."
So how should an agent respond in the off chance a client does asks questions? "We recommend that agents not hide from the questions of the clients, and that we should readily disclose to our clients the general nature of our compensation," Hagan said. "In addition, we may receive additional compensation based on performance criteria such as growth and profitability and the retention of our clients with our carriers. We recommend that agents do not shy away from that."