The ongoing saga of Eliot Spitzer and the actions he took as New York Attorney General in late 2004 alleging improper insurance industry payment practices has taken another turn. Spitzer is being sued by two former Marsh & McLennan (NYSE: MMC) executives alleging they were libeled by Spitzer in a column he wrote in the online publication Slate.com. IN&V looked at the history of contingent commissions before and after Spitzer filed his first lawsuit against Marsh on Oct. 14, 2004.

Much industry news will be dedicated to tracking developments on recent news of the former New York attorney general and governor of New York who sued several of the insurance industry’s largest brokers. The recent news of libel allegations by the two former Marsh Inc. managing directors, William Gilman and Edward McNenney, follow other allegations by them that Marsh helped prosecutors build a bid-rigging case against them to avoid criminal prosecution of Marsh. Watch IN&V for independent-agent-focused analysis of developments as contingents can be 5-10% of an independent agency’s revenue and often represent a large portion of agency profits.

For some perspective, IN&V obtained industry data on personal lines and commercial lines loss ratios for 1998 to 2009 and charted it against the dollars of contingency commissions paid out by insurers to agents (see below). Note this include all industry contingents and therefore include those paid to not only the typical independent insurance agent member of IIABA, but also mega brokers like Marsh, Aon Corporation (NYSE: AON) and Willis Group Holdings (NYSE: WSH).

Paul Buse (paul.buse@iiaba.net) is president of Big I Advantage® and a licensed p-c agent.