Willis Group Holdings Chair and Chief Executive Officer Joe Plumeri reiterated his position that his firm will not take contingent commissions, even if a five-year-old agreement banning them is lifted.
In a recent speech before the Executives' Club Of Chicago, Mr Plumeri said corporate America today needs to embrace a new commitment to transparency and risk management to restore trust in business and the U.S. economy.
Businesses must manage conflicts of interest transparently and resolve them in the interests of their customers, he said, noting the controversy around insurers paying contingent commissions to brokers.
"Many in our industry believe that simply telling clients that they are taking contingents makes it okay. I disagree. With contingents, telling your clients you take them does not resolve the conflict," according to Mr. Plumeri.
"In my own business, a time could soon come when Willis and its big-three competitors will be allowed to take contingent commissions again," he added. "One big insurance broker has already been given the green light by the insurance regulator here in Illinois to do just that. And New York-regulated brokers may be able to do so as well."
Mr. Plumeri remarked that "we've already decided at Willis that we're not going to go back to the old ways. We're looking to the future, and we will continue to put in place the measures that will enhance trust and transparency–not undermine them."
He added this "may mean that Willis will be the only company not taking contingent commissions–but that's okay with me."
He said opinion surveys show Americans now have less faith in business to do the right thing than after the Enron scandal or the dot-com bust.
Mr. Plumeri said he urged business leaders to reject the opaque transactions and "lip service" transparency of the past, in favor of a new commitment to accountability and openness.
"True transparency means being up-front with our various stakeholders–whether they're shareholders, clients, partners, employees, or the communities in which we do business–and explaining what's in it for them and what's in it for us."
This, he added, "means educating them in a clear and straightforward way about the risks and opportunities so they can make informed decisions based on their best interests."
To restore trust, Mr. Plumeri called on businesses to:
o Create a real contract with customers and address conflicts of interest in the way they do business.
o Elevate risk awareness at the senior executive and board levels and embrace comprehensive enterprise risk management.
o Voluntarily disclose the risks they face and their levels of insurance coverage.
o Do a better job of explaining to the American people the positive role of business in society and the economy.
He said senior executives and board members need to take a broader, more comprehensive view of risk than they do today. Companies need to hire chief risk officers and establish risk committees on their boards and demand true enterprise-wide risk management.
"The fact is that the risks of doing business are increasing–and they'll continue to increase," he said.
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