US big guns continue to fire on contingents
Aon Risk Services called on the New York attorney general and Department of Insurance to introduce greater transparency and consent standards for all insurance brokers operating in New York.
At the final hearing in Manhattan examining broker compensation,Aon Risk Services chairman and CEO Steve McGill said the issue of contingent commissions boiled down to a “fundamental principle that a client deserves to know whether its producer is working for the client or as an agent of an insurer”.
He said clients should know “what insurers the producer approaches, how much the client will pay, and how the producer will be compensated”.
“This is essential to enable the client to make informed choices, to avoid an actual or potential conflict of interest by the producer, and to produce the best and most competitive outcomes for clients,” explained McGill.
The hearing was one of three organised by the New York Department of Insurance and attorney general to gauge opinion on new regulation for insurance intermediaries in New York.
At a previous hearing Willis North America CEO Don Bailey said that transparency was “not enough” and that there should be a “level playing field” with all brokers being made to scrap contingent commissions.
Eric Dinallo, New York State Insurance Superintendent, has previously said that the hearings would help the regulator to ensure the market is “competitive, transparent and fair to all”.
At last week’s hearing eighteen different witnesses testified. The president of the influential Risk & Insurance Management Society Inc Janice Ochenkowski also called for contingent-type arrangements to be banned while Dan Glaser, the chief executive officer of Marsh Inc, called for full transparency to be mandated industry wide.
Since 2005, the US’ largest insurance brokers have agreed not to charge contingent-type arrangements but the practice remains widespread among smaller producers.