Posted on 26 Mar 2010
The Risk and Insurance Management Society (RIMS) has released a statement in support of Marsh's decision not accept contingent commissions on its core brokerage business in the Unites States but urges the brokerage firm to adopt a global ban on such commissions.
In a statement issued Thursday afternoon, RIMS said it has maintained its position that contingent commissions impose an inherent conflict of interest and should be universally banned. It therefore views Marsh's intentions "as a positive step forward" with regard to its U.S. clients served by its core brokerage operations. RIMS, however, is urging Marsh "to adopt a global ban on such commissions."
RIMS’ reaction comes on the heels of Marsh’s announcement Wednesday that it would not accept contingent commissions from insurers on placement for any U.S. or Canadian client within its core large risk management and middle-market brokerage operations.
It will, however, collect the incentive payments within its Marsh & McLennan Agency L.L.C. subsidiary and within its U.S. and Canadian consumer business, which includes affinity, sponsored program and personal lines businesses.
Decisions whether to accept contingents on business outside the U.S. and Canada will be made on a country-by-country basis and will follow client requests, a spokesman for the brokerage said.
In 2005, the world’s largest brokers agreed to give up contingents, change their business practices and pay more than $1 billion in client restitution to settle allegations that they steered business to insurers that paid the highest contingent commissions.
Last month, Marsh, Aon Corp. and Willis Group Holdings P.L.C. reached agreements with state authorities to lift the ban and the rigorous disclosure requirements contained in their 2005 settlement agreements.
Willis said it would not resume collecting contingents on its core retail brokerage business. Aon reiterated that it has “no current plans” to resume collecting contingents.