In a departure from their $850 million agreement prohibiting all contingent payments, New York officials have agreed to let Marsh & McLennan Cos. Inc. (MMC) accept contingent commissions from an insurer for which Marsh is operating as a managing general agent or underwriting manager.
The changes were included in an agreement signed Aug. 17 by New York Attorney General Eliot Spitzer, Insurance Superintendent Howard Mills and executives from MMC and Marsh, Inc. and filed with the Securities and Exchange Commission.
The new pact modifies the January 2005 agreement that banned all contingent commissions or profit sharing deals involving payments based on the volume of business Marsh placed with various insurers.
Aon Corp., Willis and Arthur J. Gallagher & Co. all signed similar agreements to forfeit contingent commissions.
The amendment defines the situations where Marsh may accept contingencies as where Marsh has been appointed by an insurer as a managing general agent or an underwriting manager, to be the insurer’s representative in connection with the management of such insurer’s book of business with respect to a specific product or product line; and in such capacity Marsh communicates with prospective insureds only through professional insurance brokers (including those units of Marsh which act in such capacity on behalf of insureds) and places all such business for such product or product line only with and for such insurer.
It clarifies MGA compensation as the compensation received from the appointing insurer as consideration for the MGA services.
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