Posted on 03 Jul 2008
The National Association of Professional Insurance Agents is hailing a ruling by the 1st Appellate Division of the New York Supreme Court which declares that contingent commission agreements are not illegal.
“This is a resounding victory for Main Street insurance agents across the nation and the American Free Enterprise System,” said PIA National President-elect Kenneth R. Auerbach, Esq. “It is also a vindication of the actions taken by PIA to turn back the attacks on a compensation system that has always been legal and ethical, despite Eliot Spitzer’s incorrect assertions to the contrary.”
The court’s action throwing out all claims relating to contingent commission agreements came June 19, 2008 in a case that stemmed from a May 2006 fraud and bid-rigging suit originally filed against Liberty Mutual by former New York Attorney General Eliot Spitzer. While other insurers and mega-brokers faced investigations of similar allegations since 2004 and opted to settle with Spitzer and other state authorities, Liberty Mutual vowed to fight the allegations in court. Some of the settlements banned the payment of contingent commissions, while others mandated the use of a disclosure form that was legally flawed and would place agents at risk of errors and omissions claims.