Spitzer3.jpgIn perhaps his last parting shot at the industry as New York’s attorney general, Eliot Spitzer’s office rocked the insurance world today by notifying four major insurers that they are no longer allowed to dole out contingency bonuses to their producers selling auto, homeowners, boiler and machinery, and financial guaranty insurance. With his action, he set in motion what might be the beginning of the end for contingency fees.

The move by the man who will be the Empire State’s governor in January was not entirely unexpected, as settlement agreements on bid-rigging allegations struck with ACE, AIG, St. Paul Travelers and Zurich American clearly state that the four must alter their producer compensation structure in any line where more than 65 percent of coverage is sold by carriers not paying contingency fees.

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