Mt. Vernon Register-News

Opinion

November 12, 2013

Assignment of carriers risky business

Dear Editor:

The Oct. 29 edition of the Mt. Vernon Register-News printed a news story entitled, “County makes insurance assignments.” The story caught my attention because I thought it was rather odd that the board would assign, dictate, or limit particular local agents to selected underwriters.

At no time do I remember any actions in the past that curtailed the normal business practices of local insurance agents and limit or assign underwriters from which they could obtain a quote. As for as I remember, previous boards practiced a simple, straightforward, free market approach for insurance bids in which any local agent could acquire a quote from any carrier in the underwriting business. As I understand it, if two or more local agents obtained the lowest quote from the same carrier at the same price, the board was free to select one agent or the other. Usually two criteria were invoked to make the selection. One, the board might consider which agent might give the better service or which agent might consider reducing his commission.

With this new bidding process in place for awarding contracts to insurance agents, manipulation and abuse seems much more likely to me. With the previous process abandoned and now the assigning of particular underwriters to local agents may seem of little importance, but I think those familiar with the insurance business know which underwriters are more likely to give lower bids for municipal or county business. With such knowledge, the one making the assignments may have the appearance, at least, of favoritism or of assigning a particular carrier to a favored local agent. I think that setting up a process like this just continues to undercut the confidence that the public has for our governmental units regardless of whether or not any unethical behavior results from the process.

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