Tuesday, 15 July 2008

Willis and Contingent Commissions

To follow up on my post about Marsh hoping for new revenue from contingent commissions (here), Willis CEO Joe Plumeri spoke out in a story (story here) saying that it's unfair that only certain brokers are prohibited from taking these commissions while other brokers and agents are free to do so.

Mr. Plumeri believes that transparency is a competitive advantage for Willis and would like to see these fees abolished for all brokers.

In the UK, risk management association AIRMIC took one of its strongest positions on the subject (story here) calling for automatic disclosure. Currently if asked brokers must disclose, but AIRMIC is calling for disclosure even when not asked by clients.

The issue has been addressed by the FSA, the regulator for financial services including the insurance industry, but the latest position seems to indicate that the market should decide. The association of brokers (BIBA) has unsurprisingly agreed that regulation is not required.

If AIRMIC didn't stand up to take this position and raise awareness to the FSA, nobody would.

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