Summary
This 8-K filing from The St. Paul Travelers Companies, Inc. (TRV) on November 30, 2006, provides an update on its Assurance of Discontinuance agreement with the Attorneys General of New York, Illinois, and Connecticut, which was initially announced on August 1, 2006. The agreement pertained to the payment of contingent commissions to insurance brokers and agents. The company has been notified that insurers representing 65% of the U.S. market for several key insurance lines (homeowners multi-peril, private passenger auto physical damage and no-fault, other private passenger auto liability, boiler and machinery, and financial guaranty insurance) either do not pay contingent commissions or have entered into similar agreements. As a result, TRV will cease paying contingent commissions for these specific lines of business effective January 1, 2007. The company stated it does not anticipate a significant impact on its operational results from this change and is developing alternative, performance-based compensation structures for its brokers and agents.
Key Highlights
- 1TRV will discontinue paying contingent commissions on specified insurance lines starting January 1, 2007.
- 2The decision follows a determination by New York's Attorney General that 65% of the market in key lines no longer uses contingent commissions.
- 3Affected lines include homeowners multi-peril, private passenger auto (physical damage, no-fault, liability), boiler and machinery, and financial guaranty insurance.
- 4This action aligns with a prior Assurance of Discontinuance agreement with the Attorneys General of New York, Illinois, and Connecticut.
- 5The company is developing alternative compensation arrangements for brokers and agents.
- 6TRV does not expect this change to have a significant impact on its results of operations.
- 7The company remains committed to competitive and performance-based compensation for its partners.