Posted on 17 Feb 2010
Regulators in three states have lifted a five-year-old prohibition on contingent commissions for some of the nation's largest brokerages in return for greater transparency on agent and broker compensation.
The attorneys general of New York, Illinois and Connecticut and the insurance departments of Illinois and New York agreed to amend the terms of settlement agreements entered into by Aon Corp., Marsh & McLennan and Willis Group Holdings that were put in place Jan. 1, 2005. The three firms, as well as Arthur Gallagher & Co., settled the cases involving bid-rigging in which agents were alleged to have steered business to the brokerages to receive additional compensation.
Late last year, Gallagher reached a deal with Illinois officials to lift the ban, leading to speculation that the other agreements, negotiated by former New York Attorney General Eliot Spitzer, would soon be abolished.
The new deal requires the three firms to provide, in all 50 states, compensation disclosure to purchasers that complies at a minimum with a proposed commission disclosure rule in New York, effective immediately, as well in compliance with rules in any of the other states, according to officials. The New York rule does not go into effect for other firms until next year.
Earlier this week, Joseph Plumeri, chairman and chief executive officer of Willis Group Holdings, said his firm would not go back to the practice of contingent commissions and in a statement, Aon’s top executive, Greg Case, was not as direct, simply saying the firm supports “clear and consistent disclosure” of compensation.