Willis in contingent commissions u-turn

Willis is “no longer ruling out” accepting contingent commission for all its lines of business, the company revealed in its first-half results.

Willis was a staunch opponent of contingent commissions, which are payments to brokers from insurers in return for a certain volume or quality of business. The broker once ran an online campaign called “Clients Before Contingents”

But Willis softened its stance in April 2012, when it started accepting contingents on employee benefits. It said at the time that the move was necessary to ensure the company’s competitive position.

This latest announcement suggests the company has completely removed its opposition to contingent commissions.

The commissions are controversial because they create a conflict of interest – a broker could be tempted to place business with an insurer that pays the highest contingent commissions rather than making the best choice for the client.

On its latest decision, Willis said: “Management believes that with adequate controls it may be possible in certain situations to accept MDI [market derived income] in the form of contingent commissions while effectively addressing any conflict of interest between Willis and its clients.

“The company, therefore, is no longer ruling out accepting contingent commissions on its property and casualty and all other lines of insurance.

“As with any other MDI arrangement, the company will evaluate proposed contingent commission arrangements against its control framework and will accept such arrangements when appropriate. The company does not expect that accepting new MDI will have a material financial impact in 2014.”