Insurance broker Aon Corp. reported that the five government agencies to its 2005 regulatory settlement agreement agreed to an amendment that will permit companies it acquires to continue to accept contingent commissions for a limited time.
Under the amendment, a company acquired by Aon will be able to continue accepting contingent commissions on existing business for three years while it phases out contingents and comes into line with Aon’s other business reforms.
Aon said it was at a competitive disadvantage when bidding to buy other companies because it was prohibited from accepting contingent commissions.
“For the last three years, brokers that have not introduced such reforms have had an unfair advantage in bidding to acquire other brokers, because they could assume a continued stream of contingent commissions from the acquired company, whereas Aon could not,” said David Prosperi, Aon’s vice president of global public relations. “This had the perverse result of favoring brokers which still accept contingents and are not transparent to their clients. The amendment agreed to permit Aon to compete on a more level playing field when seeking to acquire smaller brokers.”
The government parties to Aon’s 2005 settlement agreement are the attorneys general of New York, Illinois and Connecticut, and the insurance departments of New York and Illinois.