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July 20: Willis Group ups fight against contingent commissions     (Copyright Thompson’s World Insurance News)     Not only do contingents have the potential to affect the loyalty and service insurance buyers get from their brokers, they also negatively impact the image of the industry, says company group chairman and ceo Joe Plumeri.     He is writing in an introduction to a white paper on the issue written by international law firm Edwards Angell Palmer & Dodge,     This in turn has been is inserted as a special supplement the July 19, 2010 “Broker Trends and Profiles” issue of Business Insurance, read by more than 45,000 risk professionals in North America.     Commenting on proposed state compensation disclosure rules, the law firm says: “A regulatory arrangement built around minimum disclosure requirements tends to result in just that: minimum disclosure.”     It found that in the absence of “compelling” financial or regulatory benefits, there is little incentive for brokers to raise disclosure standards, thereby placing the burden on policyholders to ask more probing and direct questions of their brokers to assess the impact of contingent compensation on their insurance arrangements.     “Unless and until the policyholder believes it has all the information necessary to accurately answer this question,” said the law firm, “there is a risk that the trust and confidence relationship both parties to an insurance brokerage arrangement desire cannot exist.”     Mr. Plumeri said also his company believes they are at odds with the obligation retail brokers have to their clients to get them the best terms, conditions and price, and to advocate for them when they have a claim.     “It’s important for insurance buyers to know about the conflicts of interest created when insurance companies pay retail brokers bonuses for increasing premium volume and profitability.”     Willis North America chairman and ceo Don Bailey dismissed the notion put forth by many brokers that insurance buyers can effectively “opt out” if they don’t want their broker to accept contingents.     “Contingent commissions are paid annually on a broker’s entire book of business, so the cost to the individual buyer can’t be known until months after the insurance is purchased.     “Even then, the accounting is so opaque that the true cost can’t be determined without an extensive forensic examination of the books.     “Willis wants insurance buyers to have the whole story, and by making this information available, it’s our hope they will be in a better position to ask the tough questions of their broker,” he said.     The paper proposes a simple list of questions that insurance buyers should ask brokers regarding their role in the transaction and the compensation they will receive before authorizing them to make a placement on their behalf:     - What is your role in the insurance transaction and who do you represent?     - What will you be compensated and how will your compensation be calculated?     - What would have been the expected compensation for any alternative quotes presented to you?     Willis launched its campaign at the end of April at the annual Risk and Insurance Management Society (RIMS) conference in Boston.     It is centred around www.ClientsBeforeContingents.com which aims to combat apathy and increase awareness among insurance buyers about the dangers of contingent commissions in the retail brokerage business.        Thompson’s World Insurance News P.O. Box 1027,  Waterloo, Ontario,  Canada  N2J 4S1 Tel: 519-579-2500 Fax: 519-745-7321 mpub@sympatico.ca THOMPSON’S WORLD INSURANCE NEWS , Canada’s only independent weekly for p&c insurance professionals, has been the industry’s most trusted news source since 1988.