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Chicago-based brokerage Acordia Inc. has a new name and a new CEO. Dave Zuercher, who has been Acordia's chairman the past five years and head of international and insurance services for Wells Fargo & Co., became president and CEO of the world's fifth-largest brokerage in August, 2006, succeeding Peter J. Wissinger, a 20-year Wells Fargo veteran who served at the helm for only eight months. Earlier this month, Acordia became known as Wells Fargo Insurance Services Inc. in a move to better associate the brokerage with its banking parent. Mr. Zuercher spoke recently with Business Insurance Senior Editor Sally Roberts about the management change and the brokerage's future.
Q: You quietly succeeded Pete Wissinger in August after he spent less than a year at the helm. What was behind the management change?
In respect to Pete, he had a very successful career with us in businesses other than insurance, and it was just one of these things where he decided he wanted to do some other things in his life. I wish he would have decided that last January when we put him in charge of everything (laugh), but unfortunately he decided that in July. We wish him well. He was a big star for us for many years.
Q: Why did you decide to assume the role?
We have had some turnover. Kevin Conboy (former CEO) had retired and then we had Pete, so I felt it was more appropriate for me to take over the role. Most of the 5,000 team members that we have knew me very well. I had been a presence. We had set some strategic initiatives in place, such as the name changeÖso I felt it would be inappropriate to bring in another executive at this time to have to implement those things.
Q: What is your strategy for cross-selling in commercial lines?
It's a real referral model. So in commercial, a Wells Fargo business entity, like one of our branch stores that handles small businesses or one of our regional commercial banking offices that handles medium-sized business or one of our U.S. corporate banking offices that handles large businessesÖ they would typically talk to their customer about the idea of insurance and then make a referral to one of our producers. We have it essentially set up to where if you're in Denver, say, you would make a referral to a Denver producer and then that producer would make the sale from there and the banker would be out of the mix.
Q: Like other insurance brokers, Wells Fargo Insurance has faced charges over its compensation practices from several state attorneys general, including former New York Attorney General Eliot Spitzer. Unlike the other brokers, though, you did not settle the lawsuits, choosing instead to fight. Why?
The short answer is we haven't done anything wrong. Contingent compensation is a longstanding practice in the industry and it is legal and it's been upheld in numerous legal cases over the years. I think that's the main reason; we just don't think we've done anything wrong. We do agree that disclosure is a very important aspect to any kind of compensation we receive and our customers should be entitled to understand where we make our money, and we employed a very rigorous procedure two years ago, almost. So far, we've disclosed every dime we've received on a policy-by-policy basis to every client.
Q: Where does the lawsuit stand?
I really don't want to comment on the case itself and on the particulars of the case.
Q: What do you think of Travelers' and Chubb's recent decisions to phase out contingent commission payments to brokers and replace them with supplemental payments that fall outside the definition of contingents?
We believe we perform a valuable service for our insurance carriers. If you look at the type of customer we have--the middle-market and small-business customer--for 99% of our clients, the only risk manager they see is one of our people. So there is a value we perform and we are happy to be compensated for that. If (Travelers and Chubb) choose to develop another form of compensation that recognizes the fact that we give them business that performs at or above the norm or an acceptable rate to them--and that's what we're intending to do--then consequently we're happy to be compensated for it and disclose it to our clients.