Survey in Broker Basics

Have scandals changed the benefits carriers and brokers business alliance?

By Peter Mead

A recent study found that intermediaries will still accept an occasional lunch with a carrier's representative, but other historic perks are out, such as dinners, golf games, sporting events or trips.

"Intermediaries don't have the time/interest (in those perks), don't want to feel obligated or don't want the appearance of impropriety," the study reported. The survey, commissioned by Minnesota Life Group Insurance, used an independent marketing researcher to conduct interviews with 30 U.S. intermediaries, including many major brokers and consultants.

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"We wanted to make sure that what we were doing and what we were presenting to them as a company was consistent with their interests," explained Bill Markwardt, vice president of Group Life sales for Minnesota Life. Any carrier might say the same, and brokers and consultants also might want to know how their peers approach the carrier-intermediary relationship.

Notably absent from the survey were any questions about contingent commissions. Most national brokers now have a "no contingents" policy, while some regional brokers still accept them. Minnesota Life, reflecting continuing ambivalence in the industry, will pay contingent commissions on two conditions: it's acceptable to the client, and any commissions paid are included in the plan pricing. Spokeswoman Maggie Jensen said Minnesota Life has noticed fewer intermediaries asking for contingents.

Although many historic perks are out, survey participants liked conferences or regional seminars for continuing education credits, if the carrier's product line isn't the only topic on the agenda. Popular topics are emerging trends, government/legal/compliance issues, terrorism, defined-contribution plans and disability claims management.

Survey participants showed concern about the reputation of carriers they recommend to clients. This could be related to increased attention to avoiding any appearance of impropriety, but also to practical aspects of client partnerships that the survey report also addressed.

Intermediaries prefer to engage their clients in a long-term reliable relationship with a carrier offering rates that truly represent the clients' risk experience, the report also found.

July 1, 2006

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