Plumeri tough on commission

Willis boss Joe Plumeri has repeated his company's unique stance that it won't accept contingent commission payments from insurers.

Simply disclosing broker and agent compensation is not "true transparency" because it doesn't eliminate the conflicts of interest inherent in accepting contingent commissions, he has said. "Simply telling clients that you are taking contingents does not make it okay," Plumeri said.

"It does not change the fact that you have an incentive to act in the interests of someone other than your client - and that when push comes to shove you might not fight for the best deal in the marketplace or advocate fiercely to recover a claim if you know your compensation from the insurer will suffer.

Transparency

"It sounds like transparency, but it can never be true transparency. I am convinced that the only way to resolve the conflicts inherent in contingent commissions is not to take them.

“We stopped taking them because we want to be paid for the value we provide our clients, not the insurance companies."

Willis became the first and only insurance broker to refuse contingent commissions from insurance carriers when working for retail clients as long ago as October 2004. Some US Regulators later banned the major brokers from taking such commissions. The UK's Financial Services Authority hasn't.

Build trust

"We actually took a big step forward to building trust with our clients when contingent commissions were banned for the largest brokers in 2005. At Willis, we've abolished them, and we're not going back. We're a better company for it," Plumeri said.

"How will we look as an industry if brokers can earn commissions from insurers for giving them business and not for the value we provide to our clients? We're already one of the least trusted industries globally," Plumeri said.

Plumeri is a keynote speaker at this summer’s British Insurance Brokers’ Association (BIBA) conference.