The company agreed to discontinue paying contingent commissions on any line of business if 65 percent of the United States market for that line does not pay such commissions or has signed similar settlement agreements.
This is the result of outright dishonest behavior by a few (see here):
The investigation found that St. Paul Travelers … participated in a scheme to fix insurance prices in the excess casualty area… An example [is an] e-mail from a broker at Marsh & McLennan Companies to a St. Paul underwriter seeking a phony bid for an insurance contract that was being steered to one of St. Paul 's competitors, Zurich.
The settlement is a back-door approach by the NY and CT AGs to drive contingent commissions out of the industry (see our prior post on the Zurich settlement). Insurance agents are not happy to be paying the price for the unethical behavior of the large brokers. Some of the insurance agents associations are not pleased (see here and here):
- Those insurers and producers who have engaged in illegal bid-rigging and anti-competitive behavior should be held accountable to the fullest extent of the law.
- Shame on insurers who enter into settlement agreements that punish the good deeds of many for the bad deeds of a few.