The other top brokers, speaking at a later CEO panel during RIMS, were careful not to commit one way or the other, but assured buyers in the audience they would confer with clients before accepting any new form of compensation.

RIMS is having none of it, however. As reported by our own Caroline McDonald, Terry Fleming, a RIMS board director, said the most recent compensation plans put forth by various carriers is “a model that can be manipulated,” calling on insurers to “come up with some other form of compensation, or some other way to work the compensation.”

In its formal statement, RIMS recalled that “in response to regulatory matters and settlement agreements, many brokers pledged to refuse to accept placement fees from insurers on business where they represent the buyer. RIMS applauded this action and supported the prohibition on the use of placement service agreements or other similar arrangements for the entire broker industry.”

The statement added that RIMS is “disappointed to learn that some brokers are apparently reconsidering their pledge to refuse to accept these fees.”

RIMS went on to say that they would fight against any wolf-like fee-structure in sheep's clothing. “For brokers and independent agents to accept these fees in transactions that are made on behalf of the buyer represents an inherent conflict of interest,” the association declared.

The Council of Insurance Agents and Brokers, which includes the biggest national firms in its membership, without addressing these new fee structures in particular, told our own Mark Ruquet their position has been, and continues to be that full disclosure of fees is paramount to keeping the trust of clients. So long as brokers practice complete transparency in disclosing the fees–allowing buyers to make informed decisions–there is no need to dispense with them, CIAB added.

Independent agent groups were less diplomatic. Already furious with being dragged into the contingency fee debate because of misdeeds by certain national firms, agent associations reacted immediately to the latest RIMS call as if someone had said the infamous 'Niagara Falls” in the old vaudeville act, and I can't say I blame them.

To condemn an industry-wide compensation system solely because of abuse by a few large brokers is to grasp at an easy solution at the expense of the many honest independent agents who offer choice to their customers, according to Robert Hempkins, president of the Independent Insurance Agents of Texas.

He added that while IIAT supports disclosure of compensation arrangements to clients, in the end, insurance buyers should care more about the total cost and the service they are getting from the agent and the carrier…Risk managers who are focused on compensation plans to the exclusion of other aspects of the insurance purchase run the risk of being penny wise and pound-foolish.

David Nielson, executive director of the Alliance of Insurance Agents and Brokers in Sacramento, Calif., said that a clear line must be drawn between legitimate contingency bonuses, versus bonuses paid to firms as an incentive for steering business from one insurer to another.

The Alliance, he added, agrees that those involved in underhanded deals must be punished. However, regulators, politicians and industry officials must understand this distinction and avoid knee-jerk reactions that punish honest, reliable agents and brokers.

The big problem going forward is how to do business in what has become a bifurcated market, with some brokerages taking contingency fees and others swearing off them, while independent agents–technically representing carriers, not buyers–are in another region altogether.

How will this be resolved? If RIMS remains vigilant and vocal, I don't see how brokers–especially those who gave up contingency fees as part of legal settlements–can get away with taking any of these new-fangled incentive compensation deals. But RIMS alone, I don't believe, will be able to keep such fees out of the market altogether, especially with those many brokers out there who did not already surrender them under the gun.

In the end, it's really up to risk managers themselves to take charge of their own brokerage relationships and determine what they can and won't live with in terms of producer compensation.

Robert A. Rusbuldt, CEO of the Independent Insurance Agents and Brokers of America, made this point in a telephone interview with Mark Ruquet. In a free-market economy, he told Mark, it should be the individual risk manager who decides whether to deal with a broker who accepts contingents. Those risk managers and chief financial officers will buy insurance based on price, coverage and service, he said. Incentive compensation will not be a determining factor.

RIMS acknowleged as much themselves. Mr. Fleming called on risk managers “to step up, be more vocal and hold their vendors accountable.”

This is something the brokers have been telling us for years, saying risk managers have the power, so they need to use it–to make sure they're getting what they want in dealing with the brokers and insurers, he said.

All this raises some controversial questions, such as:

–Do we need to set regulations over contingency fees–particularly on disclosure–or can the free market alone handle the job from here on in?

–Given that agents and brokers need to be adequately compensated for their work, just what kind of payments would individual buyers and RIMS be able to live with?

–Is a bifurcated system–where some can take such fees and others can't–okay because people who cheated clients deserve to be at a disadvantage? Forever? Or is there a time when brokers involved in the scandals can accept such bonus fees again, as long as they are properly disclosed and approved by buyers?

–Are profit-based incentive programs more acceptable than the volume-based fees that got the big brokers into trouble?

–Are independent agents the innocent victims of guilt by association here? If so, what can be done to clear their reputation, especially when no agent has been accused of wrongdoing?

I'm curious to hear your responses.