Insurance brokerage Aon says it will resume accepting contingent commissions from insurers. The move comes five years after Aon, along with brokerage giants Marsh and Willis Group, agreed to forgo such commissions in a settlement that followed then-New York State Attorney General Eliot Spitzer's investigation into bid-rigging in the industry.
Earlier this year, state insurance regulators from New York, Illinois and Connecticut gave big brokers the go-ahead to resume collecting such commissions after complaints of unfairness that smaller brokers could still accept the fees. In March, Aon and Willis said they would not accept contingent commissions, while Marsh said its core U.S. brokerage operations would not accept them.
In a statement released July 21, Steve McGill, chairman and CEO of Aon Risk Solutions, says the broker decided to accept compensation "which may include supplemental and/or contingent commissions...where appropriate and legally permissible."
Aon's move brought criticism from the Risk and Insurance Management Society, a stalwart opponent of contingent commissions. In a statement, RIMS said it was disappointed by Aon's move and stands by its request that brokers not accept contingent commissions "as they pose an inherent conflict of interest."
Willis was also critical, arguing that Aon's announcement on contingent commissions "should come as a wake-up call to all risk managers and buyers of insurance to re-evaluate whether their broker really works for them, or for the insurance carrier."
For more on the contingent commission issue, see Contingent Commissions Make a Comeback.