NU Online News Service, July 22, 11:23 a.m. EDT

Calling Aon's decision "troublesome and ambiguous," Willis Group Holdings roundly criticized the insurance broker's decision to accept contingent commissions while having to explain its own legacy contingent commission issue.

In a statement released yesterday, Willis said that, "With Aon retreating to a troublesome and ambiguous position on contingent commissions, Willis now stands as the world's only insurance broker to refuse to accept contingents in its retail business."

The broker went on to say that Aon's announcement is "a wake-up call to all risk managers and buyers of insurance to re-evaluate whether their broker really works for them, or the insurance carrier." Willis said Aon is putting "contingents before principle" because it is doing "what is 'legally permissible.'"

Willis went on to question whether buyers are comfortable with that situation, adding that Aon is "taking back door payments from carriers."

Yesterday, Chicago-based insurance broker Aon announced that it would take contingent commissions on its business where legally permissible and adopt full transparency and disclosure of the contingents received.

Both Aon and Willis were among four global brokers that discontinued accepting contingents back in 2005 in the wake of investigations by New York Attorney General Eliot Spitzer that produced allegations of steering of insurance contracts to carriers paying the lucrative commissions.

While declaring that it is the only insurance broker that refuses to take contingent commissions, Willis does have legacy issues with contingents from its acquisition of Hilb, Rogal & Hobbs back in 2008.

A Willis spokesman said at the time of the acquisition that HRH was collecting $50 million in contingents, a bonus paid on a book of business based either on volume or performance. Willis agreed to convert those contingents to upfront, enhanced commissions over a three year period.

That conversion is now "essentially complete," the spokesman said.

According to a filing with the Securities & Exchange Commission, in the first quarter of 2010 Willis had $8 million in contingents left to be converted into upfront commissions from the HRH acquisition.

Willis does accept contingents on some managing general agency and program business where it is the agent for the company and is working with other agents, not dealing directly with retail clients, the spokesman said.

He noted that this is a miniscule portion of Willis' business, which is primarily retail brokerage, but did not have a breakdown of the figures.

Officials at Aon declined to comment, but expressed disapproval with Willis' response.

Special Reports /

Willis Slams Aon's Contingent Commission Decision

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