RIMS Revised Statement on Broker Compensation
October 14, 2009
RIMS continues to call for complete transparency and full disclosure by the broker of all revenue streams associated with the placement of insurance products when they are acting on behalf of the buyer. To do otherwise runs counter to the relationship of trust between brokers and consumers. It has always been RIMS position that there is an inherent conflict of interest when a broker receives payment from both buyer and seller in a transaction made purportedly on behalf of the buyer.
These conflicts of interest can only be mitigated with full transparency and agreement between the parties in advance of any submission to market, purchase or placement of coverage. Risk managers must require full transparency on these issues and decide if there is adequate and discernible value derived for their employers. In RIMS opinion, risk managers are entitled to receive the same information provided to the insurers since, indeed, it is the buyers’ money that is paying for the entire transaction, including the additional services.
RIMS has no issue with any broker marketing new products or services to insurers or buyers of insurance. In fact, we encourage these initiatives as catalysts to enriching the insurance placement process. For broker-marketed new products and services to insurers, RIMS would support development of separate agreements between the two which do not link these services to specific clients. However, when a broker receives payment from both the carrier and the buyer for the placement of insurance products, risk managers and insurance buyers are entitled to complete transparency and full disclosure without request.
RIMS reiterates its support for a broad prohibition on contingent commissions. RIMS also believes that insurance carriers should reduce premiums charged to buyers whose brokers do not accept contingent commissions or a credit should be passed back to the buyer.
As the voice of the commercial insurance consumer, RIMS will continue to speak out on issues that impact our membership.