Earlier this year, Aon, along with Marsh and Willis, reached an agreement with officials in New York, Connecticut and Illinois to lift a ban on taking contingents that was established in 2005.

The ban, which also included Arthur J. Gallagher, was agreed to by the brokerages after allegations were raised by New York's attorney general that brokers had engaged in rigging bids and steering insurance contracts to certain carriers in return for additional contingent commissions.

AJG had earlier reached an agreement to lift the ban with the Illinois attorney general. (See http://bit.ly/cRZii8 for details.)

Under the agreement to lift the ban, the brokers agreed to commission disclosure requirements laid out by the New York Insurance Department that will be imposed on all brokers doing business in the state starting on Jan. 1, 2011. (See http://bit.ly/bmPx3k for more on that agreement.) Insurance agent groups are suing to stop implementation of the new regulation.

A representative for Aon said the firm plans to meet or exceed all requirements for transparency globally.

While both Aon and Gallagher said they will accept contingents once again, Marsh said it will not accept contingents on its core business in the United States and Canada.

At Willis, the company's chief executive has been on the warpath criticizing the concept of contingents and emphatically saying the firm will not accept them.

"Will your broker really shop the market to get you the best terms, conditions, price and service if it's beholden to one or more insurance carriers that will pay a bigger bonus? Not likely," said Willis CEO Joe Plumeri in a July 19 column in National Underwriter (available at http://bit.ly/9KaCVW).

The Risk and Insurance Management Society issued a statement saying it was "disappointed" in Aon's decision and maintaining the group's opposition to contingent commissions–additional compensation based on quality or volume of business with a carrier–because they are an inherent conflict of interest and interfere with the "relationship of trust" between brokers and clients.

RIMS reiterated its position that "contingent commissions should be universally banned," adding that the association of big commercial insurance buyers "views Aon's intentions as a step backward with regard to the level of service it provides to its clients."

"RIMS urges Aon to join other large brokers in agreeing not to accept contingent commissions," said Scott Clark, RIMS secretary and director of the RIMS External Affairs Committee, as well as risk and benefits officer for the Miami-Dade County School Board. "Ultimately, we would like to see the insurance industry as a whole adopt practices that place the broker in a position that best serves purchasers of insurance."

Calling Aon's decision "troublesome and ambiguous," Willis Group Holdings roundly criticized its competitor's decision to accept contingent commissions while explaining its own legacy contingent commission issue.

"With Aon retreating to a troublesome and ambiguous position on contingent commissions, Willis now stands as the world's only insurance broker to refuse to accept contingents in its retail business," the firm said in a statement.

Willis went on to say that Aon's announcement is "a wake-up call to all risk managers and buyers of insurance to re-evaluate whether their broker really works for them or the insurance carrier." Willis said Aon is putting "contingents before principle" because it is doing "what is 'legally permissible.'"

Willis went on to question whether buyers are comfortable with that situation, adding that Aon is "taking back-door payments from carriers."

Willis does have legacy issues with contingents from its acquisition of Hilb, Rogal & Hobbs back in 2008. A Willis representative said that at the time of the acquisition, HRH was collecting $50 million in contingents, and that Willis agreed to convert those contingents to upfront, enhanced commissions over three years.

That conversion is now "essentially complete," the representative said.

According to a filing with the Securities and Exchange Commission, in the first quarter of 2010, Willis had $8 million in contingents left to be converted into upfront commissions from the HRH acquisition.

Willis does accept contingents on some managing general agency and program business where it is the agent for the company and is working with other agents, not dealing directly with retail clients, the firm's representative explained.

He said this is a miniscule portion of Willis' business, which is primarily retail brokerage, but did not have a breakdown of the figures.

Officials at Aon declined to comment on Willis' response to their contingent announcement.