December 20, 2004
Elizabeth Crowe
Editorial Director
Consumer Reports
101 Truman Avenue
Yonkers, NY10703-1044
Dear Editor,
I always believed Consumer Reports took an impartial and responsible approach to the advice it provides to consumers. So, I was particularly dismayed to read the Upfront section of January’s edition, entitled “Have hidden payments hiked your household insurance bills?” The article makes an incredible leap from reporting the New York Attorney General’s charges of bid rigging and price fixing at mega-commercial insurance broker Marsh & McLennan Co. Inc., to disparagingby implication the conduct and compensation of independent insurance producers for personal lines products. In so doing, Consumer Reports ignores the facts and does your readers a disservice.
Far from giving your readers sound advice based on fact, your article is instead based upon erroneous assumptions and speculation,and it also fails to mention many of the advantages independent insurance agents provide consumers—advantages that actually make independent insurance agents the best choice for consumers. It also failed to acknowledge the disadvantages of direst-response and captive agents that your own publication has written about in the past.
Your article fails to report that the alleged abuses uncovered by Mr. Spitzer focus on the behavior of a small number of individuals at several mega-insurance brokerage firms through the use of so-called Placement Service Agreements that are unique to top-level commercial insurance brokers. PIA members serve a different market segment, the retail market. Insurance carriers do not use these types of agreements in the retail market segment for independent insurance agencies.
The article also makes no distinction between a broker and an agent, and it blurs the well-defined lines between commercial and personal lines of insurance which are separate segments of the industry and subject to different regulations.
Advising your readers to do business with direct writers so that consumers, as you put, “don’t face the bid-rigging problem” is a groundless accusation that unfairly casts suspicion on tens of thousands of honest, ethical independent insurance agents across the country who are not subjects of Spitzer’s investigations. This is outrageous. Adding to this outrage, your article bases this assertion solely on conjecture by unnamed sources. This is highly irresponsible.
PIA members are local insurance agents helping local people, in towns, cities and rural communities throughout the United States. They are owners of independent agencies that serve the needs of their customers as the appointed representatives of a wide array insurance carriers, providing their consumers with choices.
We absolutely agree that consumers should regularly comparison shop to make sure that they are getting the coverage they need at value they seek. However, advising consumers to shop only with direct-sale producers based upon a groundless accusation is simply bad advice.
PIA would be happy to work with you to help you publish a balanced follow-up story about the many benefits of doing business with a professional independent insurance agent.
Sincerely,
Leonard C. Brevik
Executive Vice President & CEO
PIA National
cc: PIA Membership
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