NU Online News Service, April 23, 3:35 p.m.EDT
|Willis Group Holdings said it will unveil an Internet-basedcampaign to educate insurance buyers about the conflicts ofcontingent commissions at the Risk and Insurance Management Societymeeting in Boston.
|Joseph J. Plumeri, chairman and chief executive officer ofWillis Group, and Don Bailey, chairman and CEO of Willis NorthAmerica, will launch the campaign during a press conference onMonday, the firm announced.
|Willis voluntarily gave up contingent commissions in 2004 beforethree other global brokers were forced to do so in the midst of aNew York State probe that revealed brokers were taking hidden feesto steer commercial clients to insurers involved in a price-fixingscheme.
|The payments at issue are controversial year-end bonuses thatinsurance carriers pay to retail agents and brokers based on thevolume and profitability of the business they give to carriers.
|Willis said this sets up a conflict of interest, because abroker, who is supposed to act on the client's behalf, isfinancially incentivized by contingent commissions to align theirinterests with the insurance carrier, whose business model is basedon increasing premiums and lowering claims costs.
|The 2004-2005 agreements were rolled back earlier this year, andWillis has publicly stated that it will refuse to accept anycontingents because of the inherent conflict of interest.
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