Insurance brokers, speaking to an investors' conference, said they are surprised contingent commissions have not been banned throughout the industry, with one top official saying he cannot understand how a double standard of compensation can exist in such a highly regulated industry.
Indeed, J. Patrick Gallagher, president and chief executive officer of Itasca, Ill.-based insurance broker Arthur J. Gallagher & Co., said he would never have predicted that a "bifurcated market" would exist on commission payments, adding that he does not understand how such a dual market can survive long term.
Mr. Gallagher was referring to the world's four major brokerage firms–Marsh, Aon, Willis and Gallagher–no longer accepting retail contingent commissions after agreeing to settle investigations by state attorneys general (principally New York's Eliot Spitzer) and insurance regulators into alleged abuses.
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