Eliot Spitzer has told four major insurers that they can no longer pay contingent commissions...
Attorney General Eliot Spitzer has told four major insurers that they can no longer pay contingent commissions to agents and brokers that sell motor, homeowners and certain other insurance products to consumers.
This notice comes as part of settlements that each of the insurers – ACE, AIG, St Paul Travelers and Zurich – entered into earlier this year, resolving charges of bid rigging and other improprieties related to contingent commissions.
Under the agreements, the insurers must change their compensation structure for brokers and agents in any type of insurance where more than 65% of the insurance is sold by companies that do not pay contingent commissions, including those that have signed agreements with the Attorney General.
Spitzer has sent the companies formal notice that this 65% "tipping point" has been reached for homeowners, personal automobile, boiler and machinery, and financial guaranty insurance. As a result, the four companies must stop paying contingent commissions for these insurance products beginning on January 1, 2007. They have already given them up for excess casualty insurance.
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