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PRESS RELEASE
Posted on: 10/19/2009
 
PRIMA Releases Statement on Broker Compensation
 
The Public Risk Management Association (PRIMA) is the largest association dedicated solely to the practice of risk management in the public sector. Our mission is to promote effective risk management as an essential component of public administration. PRIMA’s membership consists of more than 2,000 public entities in over 1,800 jurisdictions of varying sizes, budgets and complexities.


Transparency in government is a pre-requisite to financial oversight and budgetary control regardless of the size and make-up of the public entity. Public sector employees are held to high standards of transparency whenever they provide programming and services to their communities. These high standards are especially pertinent when it comes to the management of public funds.


PRIMA would like to reiterate that full and mandatory disclosure of ALL forms and sources of broker compensation should be provided to purchasers of insurance. PRIMA believes transparency in broker compensation is important for the following reasons:


• The disclosure of broker compensation that is concurrent with the release of insurance program information is fiscally responsible; therefore, all costs associated with an insurance purchase are captured as a cost to the program whenever the policy is bound.


• Complete transparency is the only way to maintain trust in the purchasing process. Public sector employees are subject to intense public scrutiny and are charged with the public trust. The conduct of risk managers and other public employees and officials must always be professional and above-board. This means that the transactions they are involved with must be done in good faith and with complete integrity. The divulging of potential conflicts of interest gives support to transparency and promotes open communications between the engaged parties.


PRIMA supports efforts that encourage and enforce full disclosure of insurance commissions or other payment relationships that could either affect the placement of insurance coverage or have the appearance of such an impact. We will continue to advocate for open dialogue on this matter.
 
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