Although contingent commissions could represent a conflict in the relationship between producers and consumers, that can be managed and should not necessarily result in the prohibition of the practice, according to New York's former insurance superintendent, Eric Dinallo.
Seeking to clarify his position following reporting on a recent speech, Mr. Dinallo told National Underwriter contingent commissions are "not unlike a lot of conflicts in financial services that we often either manage or disclose." He stressed that the conflicts surrounding such compensation deals are "not irreconcilable."
The current situation, where some brokers are prohibited from taking contingent commissions, others are voluntarily not taking them and many others do accept them, has led to segmented markets that are not beneficial to anyone, according to Mr. Dinallo.
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