Like the proverbial skunk at a garden party, I spoiled a perfectlycivil panel discussion among three mega-brokers on “leveraginginnovation as a market differentiator” by asking what innovationswere ahead to replace the billions their firms surrendered incontingency fees to settle bid-rigging allegations. Their responsesshowed there are indeed still hard feelings on the subject.

“The playing field is ridiculously unlevel,” grumbled Don Bailey,CEO of Willis North America, during the 19th Annual P-C ExecutiveConference, sponsored by the National Underwriter Company and ahost of top rating, consulting, private equity and law firms.

“Four people gave up contingency fees, while thousands ofbrokers did not,” he added, noting that some insurers and brokersare scrambling to come up with new forms of compensation that willpass muster with regulators and buyers.

“New supplemental commissions may just be contingency fees indrag,” he warned.

While conceding that “transparency is a given–clients shouldknow what brokers make on their accounts,” he said that “it isimpossible to have an intelligent conversation about this” while ahandful of major brokers are prohibited from taking contingencyfees, but the vast majority can do so and keep that fact from thebuying public.

“It's obviously a high point of frustration for us,” headded.

“On the retail side, it's a bit absurd and even surreal,” saidTed Devine, CEO of Aon Re Global. “Contingencies have not goneaway, except for three or four firms.”

He predicted there would be “a lot of innovative thought onremuneration”–with future brokerage fees perhaps following the“transaction-based capital markets model.”

“When we're in a bake-off with a broker who does not have todisclose their compensation plans, it is fundamentally unfair,”complained Norman Brown, managing director and head of productdevelopment at Marsh. “We need to level the playing field.”

As I mentioned the other day, New York is moving to do justthat, with a draft regulation due soon that would require allretail brokers to reveal all compensation schemes to buyers.

The three brokers on yesterday's panel were clearly steamingabout their competitive disadvantage, but I detected littlesympathy among attendees–one of whom caught my eye and pantomimedsomeone playing a violin to mock the panelists' laments.

As for me, I would quote the street savvy TV detective TonyBaretta, who said, “Don't do the crime if you can't do thetime.”