Back in 1993, buried deep on page 208 of The Buyers Guide To Business Insurance (which is offered free to readers of this blog, by entering your information on the right side of the page at http://icrs.biz/blog), we wrote the following:

“The agent may feel justified in offering the client an attractive quote, while still withholding the best value possible for commission reasons….The agency may elect to present a higher-priced proposal from its favorite company to give itself a larger commission, or for other self-serving reasons. With the insurance market blocked, the agency is fairly well-assured that you will be forced to accept its proposal and pay a higher than necessary premium.”

The above was one of the primary reasons I originally felt the book had to be written. And, the original version of the above passage in the book was much less delicate and politically correct. They made me take out comments like “Insurance brokering is much like cattle ranching. Once they have you as a client, all they have to do is keep you fenced in, and milk you regularly.” That was called sensationalistic journalism by the political correctness gatekeepers of the publishing industry. However, it was, in fact, an entirely truthful statement, and more accurately represents how I feel the insurance industry works.

As an example of what goes on in this industry, take a look at the joint press release from New York’s attorney general and insurance department at Corpwatch.org. It appears one of the world largest brokerages, Marsh, got caught with it’s hand in the cookie jar. I suspect giving back $850 million was less painful than having to apologize for “unlawful and shameful conduct”. It reports Marsh steered its clients to insurers with which it had lucrative payoff agreements, and that the firm solicited rigged bids for insurance contracts.

Notice the word steered. Isn’t that a term from cattle ranching?