What Did Willis Agree To Do?
In addition to the $50 million to be paid to clients, the agreement between Willis Group Holdings and New York Attorney General Eliot Spitzerlike the Marsh & McLennan Companies and Aon agreements that preceded itincludes reforms of its fundamental business practices. Under the Assurance of Discontinuance (which essentially is an agreement with no admission of guilt), Willis agreed that within 60 days, it will:
Neither accept nor request any form of contingent commissions.
Only accept fees from clients or commissions from the insurer based on a percentage of the premium, or a combination of both.
All commission arrangements will be disclosed to the customer "in plain, unambiguous written language" and must be made in either dollars or percentage amounts.
In placing, consulting or servicing any insurance policy, Willis must disclose, in writing, all quotes and indications received concerning a client's policy. Willis must also disclose any interest or relationship, including compensation, the firm has with the insurer.
The client must consent to the commission arrangement in writing.
Willis will not solicit compensation from any insurer for the placement of business.
The firm will not request or knowingly accept fictitious bids.
The broker agrees not to leverage any of its servicesincluding reinsurance brokeragefor the purpose of obtaining contingent commissions.
Willis will not place business through its wholesale brokerage arm unless the client agrees to it. Willis must fully disclose commissions, its interest in the wholesaler, and alternatives to using a wholesaler.
The firm must institute companywide written standards of conduct on compensation, subject to the approval of New York's superintendent of insurance.
Willis will establish a compliance committee to monitor the firm's adherence to the agreement.
The broker will keep reports of compliance for five years. During this period, annual reports will be filed with New York's superintendent of insurance. The reports will include each amount of compensation the firm received from insurers. The firm will also be subject to examinations by the insurance department during this five-year period.
The firm agrees not to put its own financial interests ahead of its clients.
Reproduced from National Underwriter Edition, April 15, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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