A hearing on broker compensation is being held by officials in Buffalo, N.Y. Two more hearings are scheduled for later this month in Albany and Manhattan.
New York Insurance Superintendent Eric Dinallo and New York Attorney General Andrew Cuomo called the hearings to gather information and comments before issuing regulations that address the compensation system in 2005 and 2006.
Don Bailey, chief executive officer of Willis North America Inc., was the first witness to testify. He said that contingent commissions should be phased out over a reasonable period of time and full transparency should be mandated for the entire insurance brokerage market.
To settle charges that they steered business to insurers that paid the highest contingent commissions, the world's three largest brokers agreed to give up millions of dollars a year in contingent commissions and to disclose their compensation practices to clients.
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