Willis Group Holdings Chairman and Chief Executive Officer Joe Plumeri said his firm will not accept supplemental commissions from insurers if it judges the payments are in reality contingent commissions.
His comments were contained in the text of a speech his firm said he delivered today at the Financial Services Authority's annual industry conference in London.
Mr. Plumeri said the supplemental compensation several insurers are proposing will not be accepted by Willis brokerage “if we determine that these arrangements are simple contingent commissions under a different name.”
Contingent commissions were dropped by Willis and other large brokers after investigations by New York State and other jurisdictions found they had served as a hidden reward for brokers' participation in price fixing schemes.
Insurance carriers Travelers and Chubb have both said they are developing supplemental payments to replace contingent commissions the companies no longer pay producers. The carriers ceased making the payments after reaching an agreement with then New York Attorney General Eliot Spitzer and other attorneys general to end alleged abuses.
Mr. Plumeri said even if both the broker's legal department and regulators deem the payments acceptable, the firm still may refuse to accept them if they are not in the interest of the firm's clients.
“We don't make decisions based on rules and legal interpretations, we make decisions and run our business based on principals,” according to the text of his speech.
Earlier this month, Willis put out a statement saying it was reviewing the new compensation plans.
However, the firm's approach is not completely “altruistic,” he said, noting that the firm expects to be paid for its work.
Discussing other regulatory matters, Mr. Plumeri called for the adoption of an Optional Federal Charter for U.S. insurers, noting that in the United Kingdom there is “one regulator, one set of rules, a level playing field.”
He also called for some reform of Sarbanes-Oxley. Without mentioning specifics, he said “the law and the resulting regulations have amounted to a yoke around the necks of CEOs and CFOs.”
He said some of the regulations should remain in place, “but if the result is that companies are afraid to invest or take risk to drive forward, then the rule has won out over the principal.”
The full text of his speech is available on the Willis home page at www.willis.com.
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