TORONTO, Oct. 26, 2004 – The Insurance Brokers Association of Ontario
(IBAO) is concerned about recent allegations of “hidden” commission payments
by insurance companies to insurance brokers. “Brokers have nothing to hide.
Member brokers freely declare that they are compensated on both a fixed and
contingent commission basis. This is standard contractual practice in the
industry that rewards, as in any business, elite performance enhancing
competition and service to the ultimate benefit of the consumer,” says Robert
J. Carter, CEO of IBAO.
“Brokers must maintain above average business relationships with
insurance markets in order to maintain the market and be in a position to
negotiate the best possible terms for their clients. While terms vary from
insurer to insurer, in the aggregate, total commissions are similar enough
that there is absolutely no advantage to a broker placing business with one
company over another based on commission. Most insurance companies are
regulated federally, and brokers are regulated provincially. Regulators are
fully aware of the commission arrangements including contingent commission
that in no way is excessive or unusual. Member insurance brokers are proud of
the service they provide to their customers and make no apologies for
receiving reasonable compensation for the services they provide,” says Carter.
“Brokers focus on buying insurance from an insurer that combines product,
service and price, therefore, doing the best job possible for their clients on
a day-to-day basis. Contingency payments are measured over the long term and
are not guaranteed,” says Dan Danyluk, CEO of the Insurance Brokers
Association of Canada (IBAC).
“The allegations of fraud and bid rigging described in New York are
repugnant to insurance brokers because they would represent a betrayal of
their clients. These acts are illegal in both the United States and Canada and
if proven, should be prosecuted to the full extent of the law. The allegations
allude to unethical and illegal acts of those accused. These allegations
should not be construed as representing industry-wide practice. In fact, in
Canada, the recently released report of the Canadian Competition Bureau found
no evidence of anticompetitive behaviour,” says Danyluk.
The Insurance Brokers Association of Ontario is a trade organization
representing over 9,400 independent insurance brokers in the Province of
Ontario. We work with government, regulatory bodies and insurance companies on
behalf of our members and consumers in striving to ensure that there is a
choice of insurance products and services that are available, affordable and
understandable. P & C insurance includes home, car and business insurance, but
not life insurance.