The following statement
was issued by PCI President and CEO Ernie Csiszar in response to the
investigation by New York Attorney General Eliot Spitzer alleging illegal
practices in the commercial lines insurance market.
CHICAGO – “All insurance consumers should have the
confidence that they have access to the most timely, accurate, and useful
information they need to make an intelligent purchasing decision – whether it
is to ensure their home or auto or a Fortune 500 business.
“PCI condemns any illegal and anti-competitive practices
that result in consumers being denied the opportunity to purchase the best
possible coverage at the most competitive price and believes that those engaged
in such activities should be punished to the fullest extent of the law.
“Moreover, we believe that a more competitive insurance
regulatory environment that ensures the transparency and disclosure to
consumers of the terms and conditions of every insurance contract – including
broker compensation – would go a long way toward preventing the practices
outlined in the Spitzer investigation.
The fair exchange of information is the key to achieving a truly
competitive insurance market.
“All the
regulation in the world won't prevent unscrupulous individuals from breaking
the law. Civil regulation is intended to
deter illegal acts, not preclude them.
Individuals and corporations that violate the law are subject to arrest
and prosecution after the fact. This is
exactly what is happening in the Spitzer probe.
“While
those guilty of any illegal business practices should be punished, it is unfair
to paint the entire industry with the same brush that is being applied to the
individuals and corporations named in the Spitzer complaint. It is important to keep in mind that the
businesses affected by these transactions are sophisticated corporate insurance
buyers, many of whom consult with or retain risk managers to assist them in the
purchasing process.
“PCI
believes that unnecessarily expanding the investigation with the intent of
altering long established incentive compensation systems for brokers and agents
is counterproductive and may distract law enforcement officials and insurance
regulators in other states from their primary objective – identifying,
prosecuting, and punishing those guilty of cheating consumers.
“Incentive
compensation programs, including the payment of contingent fees and commissions
based on the volume or profitability of business, are a part of the fabric in
many industries, including insurance, real estate, and auto dealerships. These agreements not only award sales
excellence, they also can result in the consumer being able to enjoy more
favorable pricing, terms and conditions.
“PCI does
not believe that these contractual relationships between insurers and agents
and brokers should be subject to review by regulators or law enforcement
officials, and we believe that it is poor public policy for legislators and
regulators to dictate the terms and conditions of contracts between private
parties.
“PCI supports a competitive insurance marketplace based on
transparency and disclosure. Anything
that skews that market -- be it burdensome regulation or illegal acts -- is not
in the best interests of consumers, companies, or the market.”
PCI is composed of
more than 1,000 member companies, representing the broadest cross-section of
insurers of any national trade association.
PCI members write $173.6 billion in annual premium, 39.1 percent of the
nation’s property/casualty insurance.
Member companies write 49.1 percent of the U.S. automobile insurance
market, 37.8 percent of the homeowners market, 31.8 percent of the commercial
property and liability market, and 38.5 percent of the private workers
compensation market.
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