Willis slugs Aon over contingent commissions

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26 July 2010

Willis has launched a withering attack on rival broker Aon, labelling the latter’s decision to resume commissions on retail business as “troublesome and ambiguous”.

Aon resumed accepting various forms of compensation – including contingent commissions – for its brokerage business last week. Aon Risk Solutions Chairman Steve McGill said the company believes it is acceptable to accept “all forms” of payment “that are legally appropriate”.

A ban on commissions enshrined by former New York Attorney-General Eliot Spitzer in 2005 was only lifted this year.

Mr McGill says Aon is committed to transparency, and the decision was based partly on client needs. The recommencement of contingent payments to brokers comes at the same time as Willis escalates its crusade against commissions by releasing a legal paper portraying such payments as an inherent conflict of interest.

In a statement, Willis says Aon’s decision is symptomatic of an industry “headed deeper into a morass and bound for more trouble”.

“What buyer of insurance would take comfort in their broker adopting a minimum standard of what’s ‘legally permissible’ to define their relationship?

“The recent history of broker behaviour and regulatory oversight in the insurance industry is not a proud one.  

“The permissive rules that have fostered rampant conflicts of interest have returned and, with them, an industry environment that’s headed deeper into a morass and bound for more trouble when ‘legally permissible’ is the new standard of excellence.”

Willis CEO Joe Plumeri is a long-time agitator against contingent commissions on retail business.

Following the launch of the “Clients Before Commissions” campaign in April, Mr Plumeri released a white paper last week to educate insurance buyers “about the conflicts of interest created when insurance companies pay retail brokers bonuses for increasing premium volume and profitability”.

“Willis has long opposed contingents because we believe they are at odds with the obligation retail brokers have to their clients to get them the best terms, conditions and price, and to advocate for them when they have a claim,” Mr Plumeri said.