Global insurance broker Willis Group Holdings, which has vowed to not accept contingent commissions, is urging risk managers to insist that all brokers they do business with also drop the controversial revenue source.
Willis has launched an Internet campaign, dubbed “Clients Before Contingents,” to educate insurance buyers about what it maintains are the conflicts of interest inherent in contingent commissions.
Willis Chairman and CEO Joe Plumeri debuted the campaign at the 2010 Risk and Insurance Management Society (RIMS) Conference in Boston, where he urged risk managers to use their wallets to send a strong signal against the controversial payments.
The campaign is anchored by a new web site, ClientsBeforeContingents.com, and promoted through online advertising, digital communications and online videos.
Willis initiated the campaign after recent agreements with regulators paved the way for the big global brokers to resume taking contingent commissions, which thousands of agents and brokers still use to generate extra end-of-year profits. Contingent commissions are bonuses that insurance carriers pay to retail agents and brokers based on the volume and profitability of the business they give to carriers. Willis voluntarily stopped accepting them in its retail business in 2004 before they were banned for the big brokers in 2005.
Speaking to a press conference from the Willis booth at RIMS, Plumeri explained why the broker has been a long-standing critic of contingent commissions.
“Willis put its stake in the ground in 2004 and declared contingents a conflict of interest and not in the buyer’s best interest. We stopped taking them in our retail business and are a better company for it. Buyers of insurance should ask their brokers to follow suit. It’s time for the level playing field to be free of these controversial payments. A broker should be squarely on your side, fighting to get you the best terms and conditions, the fairest premium and fastest claim service, not putting profit before principle,” Plumeri said.
“Insurance buyers have been fed misinformation over the years about contingents and it’s time to set the record straight,” said Don Bailey, chairman and CEO, Willis North America. “Clients Before Contingents states clearly where our principles lie and is aimed at empowering insurance buyers with knowledge and information. Unless your broker tells you, upfront, who is paying them, how much they are being paid and in what form they are receiving payment, you’re not getting the whole story.”
Competitors Aon and Marsh have they will not accept contingent commissions on certain business. The issue was one of the hot topics at a RIMS panel, where carrier executives defended the payment of contingent commisisons to agents but said they would prefer if risk managers paid brokers directly for their services. All carrier CEOs, as well as brokers, however, supported disclosure and transparency of any comopensation paid to brokers.