Fractured Loyalty: Customer Versus Company
A producer’s response to request to move AIG business could depend on whether that producer is an agent or a broker.
“If the producer is a broker, working only for the client with no agency agreement with the carrier, they work only for the client and act in the client’s best interest,” said Chris Boggs, associate editor of MyNewMarkets.com. “If the producer is an agent for AIG, they are contractually required to act in the best interest of AIG since agents work for the carriers with which they are contracted. However, if the client comes to an agent for AIG, and requests that coverage be moved, the agent has little choice but to move coverage or risk losing the client.”
Comments on Insurance Journal’s Web site in reaction to the story on producers moving business show the producer community is conflicted over what to do.
One broker wrote:
“I am a broker and have had several calls from senior management from other carriers smelling blood in the water and wanting AIG business. I find it interesting that when I marketed the very same business over the years that they now want, they were not interested. Yes, as an agent, I have an obligation to my client and have been and will continue to provide options. However, I will not throw AIG under the bus as they have been a business partner for several years and I see them continuing to be in that same role. AIG is going to look a lot different in the next six to 12 months, but their insurance side is strong and will continue to write business. They will know who their friends are, and they will remember.”
And another agreed:
“I agree with you 100 percent … It’s easy to call one another partners when times are good for both, but when one side gets dropped to its knees, the hardest part isn’t necessarily for that side to get back up, it’s the conviction, loyalty, and mettle their partner displays by standing shoulder to shoulder and saying lean on me for awhile until you’re back up. … Those that cut and run do so solely out of fear.”
Others that acknowledged fear is a factor and claimed to place loyalty to the customer above loyalty to the company:
“It is fine to say, ‘I am hanging with AIG during these troubled times.’ My fear would be, as an agency owner, considering my clients well-being first. If I continue to place business with a ‘government controlled entity,’ how will I provide decent service? How sure am I that $85 billion is enough? What if we continue to place business and the numbers grow and the deal is not working for anyone? After the initial fire sale of AIG assets, I worry that my E&O would be tapped for continuing to place business with a company whose parent company is totally illiquid … My additional concern is taking a hit and not being paid commissions for the work. I might ‘slide’ business elsewhere … just protecting my clients so my agency will be here in the future!”
Added another broker:
“AIG is bankrupt and if you think they will remember you when you are down, think again. You owe it to your clients to protect their interest, not AIG’s. This is a good reason not to mix insurance with others businesses.”
The pullback reflects agents’ desires to protect their clients as well as themselves.
“It’s not really a surprise, especially if an agent has been through a few company meltdowns such Reliance, Royal and other such carriers,” said MyNewMarket’s Boggs. “When the boat springs a leak, it sinks a lot faster than you think or hope. Agents don’t want to be accused of not being proactive. Better safe than sorry.”