With all the attention on contingent commissions surroundingfour major insurance brokerage firms, little note was paid to onebroker's public declaration it has abandoned taking the fees.

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With no fanfare, Palmer & Cay decided late last year to dropcontingent commissions and placed a notice on its Web site to thateffect.

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In it, the broker said that in response to "recent concernsassociated with contingent income commissions" it has "discontinuedall contingent income agreements."

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The 137-year-old insurance brokerage firm, Savannah, Ga.-basedPalmer & Cay recently was acquired by Charlotte, N.C.-basedfinancial services giant Wachovia Corporation.

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Independently, around the same time in November, before themerger, Wachovia decided it, too, would no longer accept contingentcommissions.

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Sandy Deem, vice president of corporate communications forWachovia, said the insurance division decided it would endcontingent fee agreements. Like Palmer & Cay, it is not underany investigations, she said. The discontinuation of the fees wouldhave "no material effect" on the company's operations.

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When asked why the company never publicized the discontinuation,she explained that, "there are some issues we prefer to communicatedirectly to our customers."

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Palmer & Cay said it discontinued the agreements due to thepublic perception that the fees are connected to unethicalbehavior. The broker said it knows of no circumstance in itsbusiness dealings where the fees affected its contract placementsbut felt it was in the best interest of full disclosure todiscontinue the fees, adding, the "termination of these agreementsis the right thing to do."

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The acquisition brings 950 employees spread among 22 states andWashington, D.C., in 34 offices into the fold of Wachovia InsuranceServices. Wachovia said that the purchase, terms of which were notreleased, would place the firm in the top 10 of insurance brokeragefirms.

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Marsh & McLennan, Aon, Willis, and Arthur J. Gallagher alsohave discontinued the commissions. The four major brokers havereached agreements to end state inquiries into the fees. Theinquiries began last year when New York Attorney General EliotSpitzer sued MMC for alleged abuses that involved steering andkickbacks in return for volume placed commissions.

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Unlike the other four, Palmer & Cay's decision to terminatethe fees was not in response to any investigation of its practices,according to a knowledgeable source, and there are noinvestigations taking place. The fees constituted between six andeight percent of its annual revenues, the firm said on its Website.

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Wachovia Insurance Services said that, with the Palmer & Caymerger, the division would generate more than $400 million inannual revenue with approximately 1,800 employees. As a whole,Wachovia Corporation for the first quarter of 2005 reported netincome of $1.6 billion, or $1.01 a share, on revenues of $6.5billion.

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