Aon To Take From Insurers Commissions Once Banned Under Spitzer

Date : 07/21/2010 @ 12:32PM
Source : Dow Jones News
Stock : (WSH)
Quote : 47.18  0.0 (0.00%) @ 2:05AM

Aon To Take From Insurers Commissions Once Banned Under Spitzer

Aon Plc Class A Ordinary Shares (UK) (NYSE:AON)
Historical Stock Chart

5 Years : From Jul 2012 to Jul 2017

Click Here for more Aon Plc Class A Ordinary Shares (UK) Charts.

Aon Corp. (AON), one of the world's leading insurance brokers, said Wednesday it will accept a controversial form of compensation from insurance companies under some circumstances.

Aon joins rival Marsh & McLennan Cos. (MMC) in deciding to accept contingent commissions--with some self-imposed restrictions--after New York's insurance regulator allowed the practice earlier this year. The two firms, along with smaller rival Willis Group Holdings Plc (WSH), had been banned from accepting them after former state attorney general Eliot Spitzer mounted a campaign against the payments in 2004.

Brokers match the companies that buy insurance with the sellers of the coverage, and since the contingents were banned the three brokers have been paid only by the buyers. Smaller brokers such as Brown & Brown Inc. (BRO) have continued to take the commissions from insurers, which can be linked to factors including how profitable the policy is for the insurance company.

Spitzer had argued the contingent payments amounted to secret kickbacks, and the companies agreed to stop accepting them in 2005 in a settlement with the then-New York attorney general that applied worldwide. Under an agreement reached with New York regulators in February, the three leading brokers agreed to disclose the fees to their clients as a condition of the lifting of the ban.

But Willis has said it will continue to forgo contingent commissions, and argued that the payments raise the question of whether the broker is acting in the best interest of its clients. Marsh & McLennan said in March its large and middle-market operations in the U.S. and Canadian businesses wouldn't take the payments, but it would accept contingents elsewhere.

Aon wasn't as specific in a statement released Wednesday.

"We have decided to accept various forms of compensation available, which may include supplemental and/or contingent commissions in the geographies and client segments globally where appropriate and legally permissible," said Steve McGill, chairman and chief executive of Aon Risk Solutions.

Alan Devlin, and analyst for Atlantic Equities in London, said in a note to clients that Aon accepted about $200 million of contingents annually "at its peak," while Marsh & McLennan took about $800 million before Spitzer took action against the payments.

-By Erik Holm, Dow Jones Newswires; 212-416-2892; erik.holm@dowjones.com

 
 


Your Recent History
LSE
GKP
Gulf Keyst..
LSE
QPP
Quindell
FTSE
UKX
FTSE 100
LSE
IOF
Iofina
FX
GBPUSD
UK Sterlin..
Stocks you've viewed will appear in this box, letting you easily return to quotes you've seen previously.

Register now to create your own custom streaming stock watchlist.


NYSE, AMEX, and ASX quotes are delayed by at least 20 minutes.
All other quotes are delayed by at least 15 minutes unless otherwise stated.