New York Attorney General Eliot Spitzer's much-ballyhooed investigation of the broker-company-risk management relationship failed to arouse deep concern among leaders in the risk management community, according to a former executive director of the Risk and Insurance Management Society.
Jack Hampton, staff head of the organization from 2000 to well into2004, told Risk & Insurance® the issue "didn't excite" the organization's executive council despite the tumult.
As early as April of 2004, Hampton says, when the Spitzer probe was well under way, RIMS was in touch on the matter with Marsh and with Aon and Willis as well, the brokerage firms most involved.
In that time frame, he says, he spoke with Nancy Chambers, now president of the Society, suggesting that a RIMS position statement on the matter should be issued. "The summer was quiet," said Hampton, as quiet as the spring. No statement was forthcoming from the organization until mid-August.
Hampton acknowledged that the practice of insurance companies paying contingent commissions to brokers was known to RIMS, but as the investigation evolved the controversy seemed to take the RIMS leadership by surprise.
Those early questions divided the organization into two camps, he reported: those girding for conflict and those adopting an "ask but don't tell" stance. The former camp won out when the charges of bid rigging went public.
Why the silence?
Risk managers, said Hampton, are "caught in the middle." On the one hand, they "are not unhappy with their brokers," whom they value for providing what they see as their understaffed and underfunded functions with enormous outside resources. On the other hand, risk managers are under fire from within and without their organizations as a result of the questions Spitzer has raised.
The way this is playing out is that 80 percent of them, according to a recent poll, are not thinking of changing their broker.
March 1, 2005
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