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This article was brought to my attention by a reader. It asks the reader if they feel that consumers have the right to know how much their agents make on sale of insurance policies. This concern was raised after "New York Attorney General Eliot Spitzer alleged that leading brokerage firms and insurers were engaged in bid rigging in the United States".

Insurance Regulators Proposed New Guides

Article about Insurance Regulators Proposed New Guides

Propose New Guides
Feb. 15, 2006. 01:00 AM
JAMES DAW BUSINESS COLUMNIST

A national committee of regulators has decided consumers don't need to know what their agents or brokers make on sales of insurance policies.

"What the consumer really wants to know is that they are getting a product that's suitable to their needs and that's at the most competitive price," says Grant Swanson, Ontario's executive director of insurance licensing and market conduct.

A committee Swanson heads is proposing to protect consumers with three general statements of principle to govern insurance sales practices. He says they will be "easier for consumers to understand and harder for agents and brokers to evade."

Sales commissions and bonuses became a public concern after New York Attorney General Eliot Spitzer alleged that leading brokerage firms and insurers were engaged in bid rigging in the United States. Some companies have since paid large settlements.

Canadian regulators have not found suspected cases of bid-rigging here, but decided methods of compensation and financial ties between brokers and insurers might undermine consumer confidence if not disclosed.

Ontario brokers and property and casualty insurers agreed to begin disclosing commission levels, bonus programs, loans and ownership links. Life insurers and their agents also agreed to give more disclosure, but on commissions only if consumers asked.

Regulators initially raised the possibility of restricting or prohibiting bonuses and prizes that might encourage agents to steer customers to specific products or insurers.

The Canadian Life and Health Insurance Association argued there was no proof such performance incentives harm consumers, and said it would be "imprudent" to ban the incentives. The association argued insurers' distribution systems could become less effective, resulting in lower levels of coverage for Canadians.

Articles from November 2006
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