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Marsh Won't Take Contingent Commissions for U.S. Clients

Source: Dow Jones


Posted on 25 Mar 2010

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Marsh & McLennan Cos. (MMC) said its insurance broker unit Marsh will not accept contingent commissions on any placements for U.S. clients served by the firm's core broking operations.

In February, Marsh & McLennan, Aon Corp. (AON) and Willis Group Holdings PLC (WSH), the largest insurance brokers by revenue, reached an agreement with New York prosecutors and regulators to lift the ban on contingent commissions in place since 2005.

Lifting of the ban could boost the brokers' revenues amid toughening competition for business, as insurance prices continue to fall. It likely will also lighten their administrative and compliance burden while ending grumbling that these firms were on an uneven playing field with smaller brokers, which weren't subject to the earlier ban.

Under the agreement, the brokers also have to abide by the terms of New York broker compensation disclosure rules.

Marsh & McLennan said its unit Marsh & McLennan Agency LLC and Marsh Consumer's affinity, sponsored program and personal lines businesses will accept contingent commissions.

In addition, the Marsh unit will continue to collect commissions and fees for services from insurers related to its core broking operations. Those forms of compensation are fixed before insurance transactions and are not related to volume, retention, growth or profitability.

Marsh & McLennan's shares were at $24.46, down 1 cent, in after-hours trading. The stock has gained 19% in the past year, below market averages.


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