RIMS want commission ban

US commercial insurance buyers group the Risk and Insurance Managers Society (RIMS) has called on Marsh to implement a total ban on contingent commissions.

In a statement, it said: “RIMS urges Marsh to adopt a global ban on such commissions.”

But Rims said all brokers should at least follow Marsh in refusing contingent commission on commercial insurance. Ideally RIMS wants contingent commissions banned.

Conflict of interest

It says they “impose an inherent conflict of interests upon the insurance buying transaction, regardless of the nature of the client or the intermediary. Contingent commissions also impact pricing, as fees are passed along to the consumer”.

Terry Fleming, president of RIMS and director, division of risk management for Montgomery County, Maryland said: "RIMS is pleased that Marsh has joined other large brokers in agreeing not to accept contingent commissions. We call on all brokers to make the same commitment to their customers.

"Further, we call on the insurance industry to develop alternative forms of compensation that do not place the broker in the position of a conflict of interest in the insurance purchase transaction."

Enhanced commissions are no better

RIMS also said that many of its members regard enhanced commissions and contingent commissions as one in the same. It said Marsh's efforts to collect enhanced commissions on a flat fee, rather than a volume basis, still had to be declared openly.