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In high school physics, I learned Newton’s third law of motion: “For every action, there is an equal and opposite reaction.” I didn’t think it would be relevant to the insurance industry, but I was wrong. Why?

The Action: New York Attorney General Eliot Spitzer filed a lawsuit two years ago against Marsh & McLennan alleging that it engaged in bid-rigging and accepted secret up-front fees for placing insurance business with certain carriers.

The Reaction: Broad-based investigations into incentive compensation practices were launched by insurance regulators and state attorneys general across the country; some large brokers entered into voluntary settlements with regulators agreeing not to accept incentive compensation from carriers, and called on others to follow their lead; some carriers entered into voluntary settlements agreeing not to pay incentive compensation on excess lines through 2008 and on any line if the so-called “65% test” is met; and trial lawyers filed class action lawsuits in an effort to capitalize on the alleged misconduct of a few.

But you know all of that. What about the Big “I” reaction? We have done many things, including:

1. Immediately assembling a team of seasoned, dedicated Big “I” staff to dissect and address this issue from every angle.

2. Adopting an IIABA Board of Directors Policy Regarding Broker Placement Service Agreements on Oct. 8, 2006, just six days before any hint of the lawsuit to be filed by Eliot Spitzer against Marsh & McLennan, and adopting a Policy Regarding Insurance Company Disclosure on Sept. 9, 2005.

3. Maintaining a focus on the distinction between the alleged activities involving bid rigging and concealed payments for the placement of business, both of which are illegal, and the use of incentive compensation, a legal and effective tool used in virtually all sales cultures.

4. Updating IIABA’s leadership and members on significant developments through national and state meetings, www.independentagent.com, IA magazine and Insurance News & Views, IIABA’s weekly e-newsletter.

5. Conveying our position externally through television interviews on networks like CNN and CNBC; in news and business publications like the Wall Street Journal, New York Times, and USA Today; in virtually every industry trade journal, and via IIABA press releases with headlines like “Big ‘I’: Incentive Compensation Should Not Be Outlawed.”

6. Testifying Nov. 16, 2004 before a Congressional subcommittee examining broker incentive compensation, with Alex Soto (now IIABA’s president) offering critical insights about the value of producers to insureds.

7. Participating at NAIC and NCOIL meetings and in the development of their respective producer compensation model laws.

8. Suppporting state associations working with insurance regulators and attorneys general to combat legislative and/or legal actions that interfere with legal incentive compensation.

9. Supporting a white paper by independent university professors, which concluded incentive compensation plays an important and positive role in serving the needs of customers, carriers and producers.

10. Meeting regularly with key members of Congress involved in insurance industry issues to reinforce the importance of maintaining the rights of carriers to pay their sales forces in all lawful ways.

11. Developing practical guidelines for members on how to give feedback to carriers.

12. Engaging in ongoing discussions with carriers and industry trade groups about how the elimination of carriers’ rights to choose to make lawful incentive compensation payments will hurt the competitive insurance environment.

13. Undertaking business and legal analysis of settlement agreements, and taking legal action by filing an Amicus Curiae brief.

14. Meeting with Eliot Spitzer’s team to communicate our position and the impact of their actions on the industry.

As CEO of your national trade association, my commitment to you remains unwavering that IIABA and I will continue to advocate tirelessly to preserve and enhance the strength of the independent agency system.

Bob Rusbuldt (bob.rusbuldt@iiaba.net) is CEO of the Big “I.”