It doesn't matter if you are a regional [broker], local or anything, contingents should be over and done with, Mr. Plumeri declared.

Two weeks ago, issues surrounding contingency fees led Willis to agree to repay $51 million to customers in settlements worked out between Willis and the New York and Minnesota attorney generals. Willis admitted no guilt, but a document filed with the agreement contained e-mails outlining a variety of steering activities by Willis as well as the use of a wholesale outlet to inflate commissions.

Willis was the first broker to eliminate contingency fees after New York Attorney General Eliot Spitzer sued Marsh & McLennan Companies in October over allegations of fraud and abuse in the placement of insurance contracts in return for lucrative contingent commissions based on volume placements.

The two largest brokersMarsh and Aonalso said they would no longer take contingent commissions after MMC was sued. Between the two, they paid more than $1 billion to settle the allegations brought by Mr. Spitzer, with MMC paying more than $850 million. Abolition of contingent commissions was part of the settlement.

At the RIMS conference the day after Mr. Plumeri spoke, however, Patrick Ryan, executive chairman of Chicago-based Aon, disagreed with the idea of abolishing contingent commissions across the industry. Instead, he called for a free market with full transparency. He noted that there are many drivers on the question of compensation and said that one model cannot fit everyone.

For Aon, the world had changed on the issue of contingent commissions and the firm gave them up because “even the appearance of conflict of interest is unacceptable,” he said. They are wrong for Aon, but they may be right for someone else, Mr. Ryan said.

“The buyers should decide who they will do business with, but buyers need to know what they are paying for,” he explained. “You, the buyer, should force full transparency and make us stand on it,” he added.

Michael Cherkasky, president and CEO of Marsh & McLennan, and chair and CEO of New York-based Marsh, called the contingency fees inappropriate, advising risk managers that they should no longer do business with any broker who accepts the fees.

He added, however, that he is against the eradication of such fees through regulation. Instead, he said insurance buyers should use their clout and demand that brokers no longer accept the fees.

“We have smart buyers who make smart decisions,” Mr. Cherkasky said. “They should say that they will not work with companies that take contingency fees.”

In response to questioning from Susan R. Meltzer, assistant vice president of risk management for Sun Life Financial, and a former president of RIMS, Mr. Cherkasky said Marsh had done a poor job of managing its internal corporate governance in the past, putting the company at risk.

Marsh “stumbled, and stumbled badly,” he said. “We will make sure it never happens again.”

Ms. Meltzer, who pushed for greater transparency of contingency fees during her presidency in the late 90s, was critical of the broker community, charging that brokers did not make information on fees available when it was asked for, despite assurances that it would be forthcoming.

“Secrecy on the part of brokers is the primary cause for the erosion of confidence that exists today,” she said.

Ellen Vinck, vice president of risk management for United States Marine Repair Inc., and incoming RIMS president, said that she did not feel that there is dishonesty in the industry.

“I disagree with Mr. Spitzer,” she said. This industry is not ripe with corruption.” However, the brokerage firms have given critics “the bullets” to intensify their criticism of the industry, she said.

Ms. Vinck blamed risk managers for not pushing for greater disclosurefor not insisting on the information and understanding it. “You need to drive it in the right direction,” she told risk managers.

On the subject of payments, she said there should only be one model. “The model should be that brokers are paid by one source, and that is the client,” she said. “You represent us, and you must make sure that our interest is first and foremost.”

Speaking more generally about the broker-buyer relationship, Mr. Cherkasky said that to further ensure honesty risk managers should obtain a written contract drawing out what the broker will do on behalf of the client.

Mr. Ryan said the most critical part of the equation in the future is to get the risk managers together with insurance underwriters to form relationships. “Any broker who does not insist on the risk manager meeting the underwriter is doing a disservice,” he said.

“We have an obligation to educate the client,” said Mr. Cherkasky on the relationship. “The broker is the true intermediary. We almost lost our way because we were not doing what was in the best interest of the client. We have to make placements in conjunction with our clients. That is our job.”

Reproduced from National Underwriter Edition, April 15, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.