An official of the National Association of Insurance Commissioners (NAIC) has expressed “regret” that innocent Main Street insurance agents were included in groups sanctioned by a handful of overzealous state Attorneys General as part of bid-rigging scandals. 

During a July 21 panel entitled Attorneys General and Insurance Policymaking: Courting State Regulation? conducted by the National Conference of Insurance Legislators (NCOIL), Robert Wake, an attorney with the Bureau of Insurance of the State of Maine who represented the NAIC on the panel, responded to PIA’s concerns that agents were being lumped together in settlement agreements with a handful of mega-brokers suspected of wrongdoing, when the agents didn’t do anything wrong.

“To the extent there were innocent victims of these practices, I regret it,” said Wake. “But to me…what happened was that these methods of compensation were discredited in some big cases and some other people where they weren’t being used ended up at least temporarily not being able to receive them either.”

“It didn’t take away their livelihood. They are still getting commissions. They are still making a good living. Their reputations are generally intact because I think the public recognizes the distinctions between the Main Street agents and the people involved in the bid rigging scandal,” Wake said.

PIA Vice President/Treasurer Kenneth R. Auerbach, Esq., who was also a participant in the NCOIL panel, expressed dismay with Wake’s comments. “While it is good that the unfairness to agents has belatedly been acknowledged by an official of the NAIC, in doing so Mr. Wake admitted that a decision had been made to throw Main Street agents under a bus,” said Auerbach. “That’s outrageous.”

“Despite this expression of regret, the fact remains that independent agents were made the innocent victims of the settlement process,” Auerbach said. “Punishing a large number of innocent victims is not OK, and attempting to justify doing so by saying that agents’ reputations remain ‘generally intact’ is insulting. The reputations of Main Street agents are indeed intact – but no thanks to the NAIC officials who were members of the Broker Activities Task Force, and who signed off on the settlements in question during secret, closed-door meetings from which agents were excluded.”

September 11, 2007